News States’ cash crunch: Govs beg FG to postpone $2.1bn support repayment, CBN kicks

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NEC faults Obaseki, says N60bn not printed to shore up March allocation
Minister fixes May date, CBN explains technical challenges in further shift
State governors on Thursday at the monthly meeting of the National Economic Council appealed to the Federal Government to postpone the repayment of the $2.1bn budget support facility to states which was scheduled to resume in May.
But the Governor of the Central Bank of Nigeria, Godwin Emefiele, kicked against the appeal and enumerated the technical challenges involved should there be a further postponement of the deductions.

The Senior Special Assistant to the Vice President on Media and Publicity, Laolu Akande, disclosed these in a statement issued at the end of the council’s meeting presided over by Vice-President Yemi Osinbajo.

Akande said the Vice President thereafter directed that a meeting be held where the issue would be properly considered and a decision reached.

For long, Nigerian states have been depending on federal allocations as a result of low Internally Generated Revenues.

The situation had been made worse with crash in revenues realised from the nation’s major export – crude oil.
As a result, most states had resorted to borrowing with a recent report by the Fiscal Responsibility Commission indicating that the subnational governments had overstepped their limits.

The report said, “It can be deduced that all the 36 states and the FCT exceeded the Debt Management Office threshold of 50 per cent.

“Lagos State accounted for the highest Debt-to-Total Net Revenue as at the end of 2019, with 712.94 per cent. Osun State came second with 650.94 per cent Debt-to-Total Net Revenue. While Cross River and Ogun States were third and fourth with 597.36 per cent and 402.30 per cent respectively.”

The statement read, “On the budget support facility, finance minister observed that the deductions for repayment by states are meant to resume in May.

“The governors however requested for an extension considering the economic challenges in the states.

“The central bank governor explained the technical challenges involved should there be a further postponement of the deductions.

“The Vice President then directed that a meeting be held soon after today’s NEC where the issue would be properly considered and a decision reached.

SOURCE: PUNCH NIGERIA

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