Kemi Adeosun, Minister of Finance
Although the nation’s economy continues to falter amid threatening
recession, relief may be on the way for cash-strapped states of the
federation as each of them may, under some conditions, get budget
support loans of up to N50billion from the Federal Government.
Disclosing this at the launch of a new stimulus package to reflate the
economy and further bail out cash-trapped states struggling to meet
basic obligations like the payment of wages and meeting servicing of
debt liabilities , entitled ‘Fiscal Sustainability Plan’ the Minister of
Finance, Mrs. Kemi Adeosun, said the new fiscal stimulus would be
conditional liquidity support designed by the government to support
states willing to embrace transparency and cost- cutting strategies in
the management of their resources.
She spoke at a meeting with states’ finance commissioners in Abuja
yesterday.Accordingly, states willing to key into the scheme must fulfill
certain basic prudent requirement like showing evidence of how they
have kept their books of accounts, including how the security votes
were spent as well as design new workable alternative sources of
internally generated revenue as opposed to the over-reliance on
allocations from the Federation Account for the funding of their budgets.
Meanwhile, inflation rate in May rose to 15.6 per cent, up from the 13.7
per cent rate recorded in April, according to the National Bureau of
Statistics (NBS).
The Consumer Price Index (CPI) released by the bureau and made
available to The Guardian yesterday indicated that the rise of the costs
of goods and services in May by 1.9 per cent of the figure captured in
April represented the fourth consecutive month-to-month increase.
One of the desk officers of the new fiscal stimulus package yesterday
told The Guardian that the Federal Government embarked on the
strategy with the support of multilateral agencies to assist the states
solve their liquidity challenges at the moment as opposed to their
compounding their huge debt portfolios from the banks.
The officer who asked not be named as he had not been permitted to
talk on the scheme which was still being finalised said the fiscal
support was different from the earlier bailout which was unconditional.
Only states compliant with the Federal Government’s new fiscal regime
to enthrone prudence and transparency in the management of resources
will be qualified for this liquidity support,” he said.
Addressing the commissioners latter, the Finance Minister, Mrs. Kemi
Adeosun told them that the scheme was a critical part of the President
Muhammadu Buhari-led administration’s plans to reset and reflate the
economy.
The nation’s economy, she told them, is a confederation of the
economies of her 36 states and the Federal Capital Territory , pointing
out that the Federal Government recognised the critical importance of
developing a broad-based economy, with productive activities in every
region and state.
She further spoke more on the new fiscal plan : “ We must ensure that
the necessary conditions for growth are firmly put in place. We are
working to achieve this through investment in enabling infrastructure
and reforms in the ease of doing business, which will spur growth and
development in the private as well as public sectors.
At the federal level, to create headroom for the urgently needed
investment in infrastructure , we are pursuing a very disciplined
approach to managing public funds, ensuring the maximisation of
revenues and the minimisation of the costs of governance.
“The Fiscal Sustainability Plan replicates this far-reaching public
financial management reform programme across all tiers of government
and marks a turning point in the management of state finances. By
raising the standard for public financial management in the areas of
transparency, accountability and efficiency, states will be repositioned
to embark on a path towards fiscal independence.
On the cost side, the pressure is to cut costs starting with the
commitment to eliminate, once and for all, the menace of ghost workers
by BVN checking of payroll and the requirement that all salary
payments are made directly to the individual accounts. This will enable
states to control the size of their wage bill and ensure that it is
affordable. The formal commitments being made to improved expense
management, greater efficiency in recurrent spending and prudent debt
management, will combine to ensure that states can move towards
improved long-term financial health.
In the area of revenue, the FSP recognises the fact that internally
generated revenue must be maximised and we have extended the
definition of revenue beyond the traditional confines of taxes, licences
and fees. In some states, there is no significant private sector and
therefore, states are being encouraged to identify their own areas of
comparative advantage and to embrace partnerships with the private
sector to generate revenue and stimulate development.
Such projects will establish the viability of key opportunities and will
attract investors. In certain states, we are already seeing notable
progress being made in specific agricultural products including rice and
yam as a source of state revenue.
When fully implemented, the FSP will begin the process of guaranteeing
that states take responsibility for their financial viability.
Pursuing the objective that IGR rather than Federal Allocation, should be
their principal focus of revenue as a fundamental change in approach.
We realise that this is not an overnight process, rather a journey, but it
is a necessary one for the future of state and local councils in Nigeria.
By agreeing that further financial support under this guaranteed loan
package, is conditional upon independently verified attainment of the 22
milestones, the state governors are to be commended. They are sending
a strong signal that they are indeed partners in the journey towards the
recovery of the Nigerian economy and are fully prepared to pay the price
for a sustainable future,” Adeosun said.
According to the NBS: “In May, the Consumer Price Index (CPI) which
measures inflation recorded a relatively strong increase for the fourth
consecutive month. The headline index increased by 15.6% (year-on-
year), 1.9% points higher from rates recorded in April (13.7%).”
It stated that the increase in rates in May, as compared to those of
April reflected an overall increase in general price level across the
economy, as all divisions which contribute to the headline index
increased at a faster pace in the same period.
The bureau further revealed that year-on-year, electricity rates as well
as other energy prices continued to manifest as key drivers of the core
component of the CPI.
“The core sub-index increased by 15.1% in May, up by 1.7% points from
rates recorded in the previous month. During the month, the highest
increases were seen in the passenger transport by road, liquid fuel
(kerosene), fuels and lubricants for personal transport equipment
(Premium Motor Spirit) and Vehicle Spare Parts groups. Imported foods
as well as a drawdown of inventories across the country continued to
push food prices higher,” the NBS said.
The CPI showed that the food sub-index increased by 14.9 per cent in
May, up by 1.7 per cent points from rates recorded in April as all major
food groups which contribute to the food sub-index increased at a
faster pace driven by higher food prices in fish, bread and cereals and
vegetables groups for the second consecutive month. In addition, the
imported food sub-index increased by 18.6 per cent in May, 2.2 per
cent points from rates recorded in April.
Culled from: http://guardian.ng/news/states-may-get-budget-support-
loans-of-n50-billion-from-government/
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