FG Should Pay States for Deductions on Foreign Loans

Date Posted: July 3, 2015 at 6:42 am

FG Should Pay States for Deductions on Foreign Loans

 Ex-Minister ofFINANCE, and Co-ordinating Minister for the economy, Dr. Okonjo Iweala

By Yinka Kolawole in Osogb0

As a result of unpaid salariesNgozi Okonjo Iweala2015 and allowances, States in the Federal Republic of Nigeria and other federating units are groaning over injustice melted out to them by the out gone administration of former President Goodluck Jonathan.

While the challenge lasted, some states had engaged the services of consultants in attempt to get the refund of payment made on what was regarded as the “first line charge” of foreignLOANS and interests.
While a few States Kwara, Taraba, Adamawa and Kano whose foreign loans reconciliation were concluded and refunded between 2008 and 2012, others were refused for obvious reasons.
Today, it is a wide spread story of inability to pay workers, untold hardships, poverty and misery to the citizenry of the affected states’ following the dramatic decline in the Federal allocation getting to the States as a result of dwindlingOIL PRICES

Investigationsby THISDAY revealed that from the reconciliation and recovery of several millions of dollars from overDEDUCTIONS of foreign loans’REPAYMENTS (first line charge) on behalf of State Governments, record available to us shows that, in a State like Osun State for instance, “the sum of USD$13.572Billion was deducted  by the federal government forLOAN repayments, loan interest, etc under the first line charge policy. This amount was excluded from all the reconciliations carried out prior and post exit of the Paris and London Club debts.
In a way that suggested attempts to cripple the opposition political party then, a perusal of the first line deductions made from June 1995 and March 2002 which were never refunded by the Federal Government in Edo state was N8, 609, 870,824.20 $161,354,146.80; Osun State was N8,715,757,105.80 -$167,261,095.70; Imo State was N10,013,218,081.30-$185,451,752.90; Bornu State was N10,133,187,816.94 -$194,461,850.70; Zamfara State was N7,472,071,548.90 -$144,169,194.00. Others included Lagos, Ogun, Oyo, Yobe and Nasarawa States respectively.
THISDAY’s investigation has equally revealed that based on the above, the FAAC Report of Sub-Committee on Reconciliation of States’ External Debts (December 2007)recommended that another Committee be set up to tackle issues relating to the application of FACC deductions under “First Line Charge” on States’ External Debts profile before April 2002.

It is important to note that despite the FAAC Committee recommendation since December 2007, no new Committee has so far been set up to look into the pending issue of deductions and servicing of loans between June 1995 and March 2002, rather States’ were being treated on individual basis by Debt Management Office These were the States’ earlier mentioned as having collected their refunds.
Investigations also made it clear that the matter was made worse by the immediate past Minister of Finance, who was the Co coordinating Minister for the economy, Dr. Okonjo Iweala, realising that it has opened flood gate of refund to States’ ordered one of the key agencies to close the books.
The exercise therefore revealed that the total deductions from the States’ statutory revenue from June 1995 and March 2002 (period of First Line Charge policy ) were completely omitted in the past foreign loan reconciliation exercise carried out by FAAC Sub-Committee, Revenue Mobilisation, Allocation and Fiscal Commission (RMAFC) and Debt Management Office (DMO).

The Federal Ministry of Finance and the Debt Management Office are therefore enjoined to act with dispatch by dusting their books in order to reconcile the figures and effect refunds to the affected states so that they can meet their obligations to their citizenry.

Source:  ThisDay LIVE


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