The Federal Government said states owing workers’ salaries would not have access to the remaining $2.69 billion Paris Club refund.
It said such states must clear backlogs of salaries and other related staff arrears to get approval for the funds, which would be made in phased tranches to the states.
The Director of Information, Federal Ministry of Finance, Hassan Dodo, made this known in a statement on Tuesday.
According to Dodo, “The Debt Management Office (DMO) led the reconciliation process under the supervision of the Federal Ministry of Finance. The final approval of 2.69 billion dollars is subject to some conditions.”
The conditions given to the state governments before the fund could be accessed, according to the statement, include; “Salary and staff related arrears must be paid as a priority; Commitment to the commencement of the repayment of Budget Support Loans granted in 2016, to be made by all States.”
Others include, “Clearing of amounts due to the Presidential Fertiliser Initiative, Commitment to clear matching grants from the Universal Basic Education Commission (UBEC) where some States have available funds which could be used to improve primary education and learning outcomes.”
The issue of Paris Club loan over-deduction had been a long standing dispute between the Federal Government and the State Governments, dating back to 1995.
Responding to the dispute, President Muhammadu Buhari had directed that the claims of over-deduction should be formally and individually reconciled by the DMO. 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, between 1st December, 2016 and 29th September, 2017, approved that 50 percent of the amounts claimed by states be paid to enable the states clear salary and pension arrears.