Monday, June 27, 2016

FG to Withhold Bailout Fund to States on Months When Allocation From FAAC Exceeds N500bn

The federal government has introduced a new limit to the monthly disbursement of N90bn budget support facility to state governments.

Punch reports that the facility would cease to be available whenever allocations from the Federation Account Allocation Committee (FAAC) to all 36 states exceed N500bn.

According to the news site, Mr Festus Akanbi, the special adviser to the minister of finance, Mrs Kemi Adeosun, told newsmen on Sunday that the new limit is to ensure fiscal prudence.



Akanbi argued that once the monthly distributable revenue was up to the threshold of N500bn, the amount that would be available to each state government that month should be enough to run its programme.

Akanbi said, “The budget support facility, which is conditional upon the implementation of the 22-point fiscal sustainability plan, is not a bailout. The implementation of the FSP is to be completed over an 18-month period. Monthly disbursements to each state will be conditional on compliance with pre-agreed FSP milestones.

“The facility will cease to be available in the next month if the distributable amount from the Federation Account is equal to or exceeds N500bn in any given month.”

He added that 35 states were already in the process of submitting the required documents for the facility.

Finance minister, Kemi Adeosun, had a few weeks back at a meeting with finance commissioners from the 36 states, announced the N90bn budget support facility to assist states in paying salary backlogs.

The loan is to be given within a year period with an initial release of N50bn of which each state is to receive N1.3bn and a subsequent release of N40bn from which each state would get N1.1bn.

Federal allocations in 2016 have not been near the N500bn threshold. Figures from FAAC put the allocation for January at N370.38bn, while February, March, April and May had N338.7bn, N299.7bn, N281.5bn and N305.12bn, respectively.

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