FG explains Paris Club refund to states

The Federal Ministry of Finance has provided clarifications on the Paris Club Refund approved for the 36 States of the Federation. In a statement issued by Ministry  the Federal Government said that states must clear backlog of salaries and other related staff arrears before they can access the balance of $2.69 billion Paris Club Refund. The Director of Information, Federal Ministry of Finance, Mr Hassan Dodo, said the Federal Government would commence phased payments of the refund to the states once the condition and several others were met.

According to the government “the DMO led the reconciliation process under the supervision of the Federal Ministry of Finance. The final approval of $2.69 billion is subject to some conditions such as “salary and staff related arrears must be paid as a priority, commitment to the commencement of the repayment of Budget Support Loans granted in 2016 by all States, clear amounts due to the Presidential Fertiliser Initiative and make commitment to clear matching grants from UBEC”.

The statement further said “This is in cases where some states have available funds which could be used to improve primary education and learning outcomes”. It will be recalled that the issue of Paris Club loan over-deduction had been a long standing dispute between the Federal Government and the State Governments which dated back to the period of 1995 to 2002. In response to the dispute, President Muhammadu Buhari directed that the claims of over-deduction should be formally and individually reconciled by the Debt Management Office (DMO). This reconciliation commenced in November 2016.

As an interim measure to alleviate the financial challenges of the States during the 2016 recession, the President had approved that fifty percent (50%) of the amounts claimed by States be paid to enable the States clear salary and pension arrears. This was released between 1^st December, 2016 and 29^th September, 2017. This refund was part of the Government’s fiscal stimulus to ensure the financial health of Sub-National Governments.