By Danladi Al-Hassan
Mrs Zainab Ahmed, the Minister of Finance, Budget and National Planning, has said that the Federal Government, will within the next two weeks, deduct the N614 billion Budget Support Facility it gave to 35 sates.
Mrs Ahmed, who disclosed this at the Public Consultation Forum on the draft 2020-2022 Medium Term Expenditure Framework in Abuja on Tuesday, said the repayment will be taken from the affected states’ allocations during the next Federation Accounts Allocation Committee ((FAAC) meeting coming up in a fortnight.
She said the refund is not going to be treated as revenue to be used to fund the 2020 budget as it was a loan that was advanced by the Central Bank of Nigeria to the states. Hence, as the payment was made by the CBN, the recovery process is for the loans to be deducted from the FAAC allocations of the states and remitted back to the CBN.
She said the process will not require a consideration of the Fiscal Strategy Paper (FSP) implementation, but to ensure the states stayed on the path of fiscal sustainability.
“This will not be a condition for the deduction. We will deduct direct at source and remit to the CBN,” she said.
The Federal Government, had in 2017, gave the conditional budget support facility to the states through the Central Bank of Nigeria (CBN).It was to enable the states to meet their financial obligations to civil servants and pensioners. The money was provided at a 9 per cent interest rate, with a grace period of two years.
The state governors have been lobbying to defray the repayment of the loan but apparently their lobby, appears to have failed.
Ahmed revealed that the Federal Government is considering a review of the various incentives and waivers granted to investors and businesses.
While acknowledging the huge cost and losses to the government as a result of the incentives and waivers, she said the review is to commence with the pioneer status certificate issuance process.
She said it is difficult for the waivers to be removed overnight, considering that businesses had already taken investment decisions based on those incentives.
“There must be a period that should be allowed for the business to exit before new conditions are imposed.
“Government is currently reviewing the quantum of waivers to see which can be put back or removed to reduce the cost of government. Despite the cost, to encourage businesses and investors and make Nigeria competitive, some of the incentives are essential,” she said.