States get Dec. deadline to implement TSA
The 36 states of the federation have until have December this year, to fully implement a centralized Treasury Single Account, TSA, in their respective states, so as to allow for proper monitoring of their revenues and expenditure.
The directive, which is contained in the Draft Fiscal Sustainability Plan, FSP, unveiled by the Federal Ministry of Finance, last week, seeks to address the culture of fiscal recklessness in governance, while ensuring prudence and accountability in public office.
The FSP which is part of the Federal Government’s on-going fiscal responsibility reform highlights 22 recommended action points aimed at improving fiscal behaviour that will align both short-term and long-term sustainability objectives of the Federal and State Governments.
Under the FSP arrangement, the state and federal governments are from September this year, expected to hold quarterly financial reconciliation meetings between them, to cover VAT, PAYE remittances, refunds on Government projects, Paris Club and other accounts.
Both tiers of government are also, from July 2016, expected to share the database of companies within each State with the Federal Inland Revenue Service, so as to help improve VAT and PAYE collection.
They are also expected to introduce a system to allow for the immediate issue of VAT / WHT certificates on payment of invoices.
Meanwhile, the state governments are from December 2016, expected to publish their audited annual financial statements within 6 months of financial year end. They are also, from March 2017, required to publish State budget online annually, while also publishing their budget implementation performance report every quarter.
The federal government under the draft fiscal plan will develop an International Public Sector Accounting Standards IPSAS, compliant software to be offered to States for use by State and Local Governments.
States will henceforth ensure that their total liabilities do not exceed 250% of total revenue for the preceding year, while Monthly debt service deduction is not to exceed 40% of the average FAAC allocation for the preceding 12 months.
They are also from December, required to establish a Capital Development Fund to ring-fence capital receipts and adopt accounting policies to ensure that capital receipts are strictly applied to capital projects.
From 2016 onwards, all State Governments are expected to abide by the Fiscal Sustainability Plan's strategic objectives around the five key elements of Accountability & Transparency, Increase in Public Revenue, Rationalisation of Public Expenditure, Public Financial Management Reforms, and Sustainable Debt Management.
Already, the 36 state governors have agreed to reform the finances of State and Local Governments under the FSP to ensure their long term viability.
A statement issued the Federal Ministry of Finance explained that the approval for fiscal reform action plan, given by the governors, will ensure that States are set on a path towards fiscal sustainability.
The ministry said the governors’ endorsement which came during the National Economic Council meeting, gave credibility to the ongoing financial management reforms of the Federal Government.
“States have agreed to reform the finances of the states and local governments under a fiscal sustainability programme to ensure their long-term viability.
“The 22-point fiscal reform action plan to be implemented by states under the programme mirrors the ongoing public financial management reforms being undertaken by the Federal Government, including: biometric capture of all civil servants, the establishment of an Efficiency Unit, implementation of continuous audit, improvement in independently generated revenue and measures to achieve sustainable debt management.”