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11 September 2019

FG to resume recovery of bailout loan given to States

The Minister of Finance, Hajia Zainab Ahmed has disclosed that the Federal Government will commence the process of recovering the 650 billion naira bailout fund loaned out to state governments in this month of September.

The Minister revealed this at the draft 2020 to 2022 Medium Term Expenditure Framework and Fiscal strategy Paper presentation, in Abuja.

According to her, the loan which was given to thirty-five states of the Federation will be recovered directly from states’ monthly Federation Account Allocation Committee (FAAC) disbursements and remitted to the central bank.

The bailout fund which the minister described as Conditional Budget Support was provided by the CBN to help states pay salaries gratuities and pensions at 9% with a grace period of two years .

In her words “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,” Ahmed posited.

The Minister further hinted that plans are in the offing by the Nigerian government to review incentives and waivers granted to investors and businesses.

She said government is considering the move due to the huge cost and losses it incur as a result of the incentives and waivers granted to various companies.

Meanwhile, the minister observed that the draft 2020 to 2022 Medium Term Fiscal Framework indicated that Nigeria faces significant medium-term fiscal challenges, especially in the areas of revenue generation and rapid growth in personel costs, she therefore assured that the key reforms such as the Strateglc Revenue Growth Inltlatlve will be implemented with increased vigour to improve revenue collection and expenditure management in the country.

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