The federal government will start recovering the N614 billion budget support facility from state governments this month. Minister of Finance Mrs. Zainab Ahmed made this disclosure in Abuja on Tuesday while presenting the draft 2020 to 2022 Medium Term Expenditure Framework and Fiscal strategy Paper.
Ahmed stated that the states will start getting direct debits from their monthly Federation Account Allocation Committee (FAAC) disbursements.
According to her, “the recovery process for us is to deduct from the FAAC allocation to the states and then we remit to the CBN and we are going to start this remittances by the next FAAC” which will hold in two weeks time.
To show how serious the government is about making the deductions, the finance minister revealed that “there will be no requirement for us to consider the FSP implementation.
We do that as a matter of wanting the states to stay on the path of fiscal sustainability but it will not be a condition for the deduction. We will deduct direct at source and remit to the CBN.”
“The N614 billion bailout funds to states is not going to form part of the revenue for funding the budget, it was a loan which was advanced by the CBN and the repayment will be made to the CBN.”
Federal Government last month said, a committee has been put in place to facilitate recovery of N614 billion given to 35 states. 35 states benefited from the facility, and each state is expected to pay back the equivalent of N17.5 billion.
On the N650 billion to the states the minister spoke about, it was a conditional budget support provided by the CBN to help states pay salaries gratuities and pensions. CBN provided N650 billion in loans at 9% with a grace period of two years. The Federal Ministry of Finance helped in disbursements with documented approval by the presidency. That was why the finance minister said the money belongs to the CBN and is going to be paid into CBN account.
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