Written by Sarah NEGEDU

Salary arrears: FG bars states from Paris Club Refund

States with backlog of salaries arrears may be excluded from accessing the final tranche of $2.689 billion Paris Club Refund recently approved for the 36 States of the Federation.

The Federal Ministry of Finance had in a statement confirmed that the sum of $2.68billion was approved as final payment of the refund, to be made available to states who meet certain conditions.

Some of the conditions listed the statement issued by Director of Information, Hassan Dodo, include the payment of salaries and staff-related arrears as a priority, commitment by all states to the commencement of the repayment of Budget Support Loans granted in 2016.

Other conditions to be met are, the clearing of amounts due to the Presidential Fertiliser Initiative as well as commitment to clear matching grants from the Universal Basic Education Commission where some States have available funds which could be used to improve primary education and learning outcomes.

It will be recalled that the issue of Paris Club loan over-deduction had been a long standing dispute between the Federal Government and the State Governments which dated back to the period of 1995 to 2002. In response to the dispute, President Muhammadu Buhari directed that the claims of over-deduction should be formally and individually reconciled by the Debt Management Office. This reconciliation commenced in November 2016.

“As an interim measure to alleviate the financial challenges of the States during the 2016 recession, the President had approved that 50 percent the amounts claimed by states be paid to enable the states clear salary and pension arrears. This was released between 1st December, 2016 and 29th September, 2017,” it noted.

The DMO led the reconciliation process under the supervision of the Federal Ministry of Finance. The ministry therefore stressed that the final approval of $2.689billion is subject to the above stated conditions.

It added, “This refund was part of the government’s fiscal stimulus to ensure the financial health of sub-national governments.”

The payment of the approved amount is expected to be made in phased tranches to the states as they meet the conditions.

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