“The loan is in two tranches – N50 billion for three months to be shared across the 36 states including FCT and then N40 billion for nine months. The idea is to tie states over for a year so that they rebalance. The loan is an average of about N1.3 billion per state for the first three months and N1.1billion for the next nine months. It is a loan and it is fully repayable although it has a secured tie against future dividends, revenues and any amount that government might owe the states.”she said
She also announced that state governors are not to collect any more loans from banks but should rather source for funds from the capital market. The decision was taken due to the disappointing manner in which some past and present state governors have managed the loans they have taken from some commercial banks. She noted that the stability of the economy in the states would reflect on the economy of the country as a whole.
“Nigeria’s economy is a confederation of the economies of her 36 states and the FCT. Thus, we recognise the critical importance of developing a broad-based economy, with productive activities in every region and state. At the federal level, to create headroom for the urgently needed investment in infrastructure, we are pursuing a very disciplined approach to managing public funds, ensuring the maximisation of revenues and the minimisation of the costs of governance. The Fiscal Sustainability Plan, FSP, replicates this far-reaching public financial management reform programme across all tiers of government and marks a turning point in the management of state finances. By raising the standard for public financial management in the areas of transparency, accountability and efficiency, states will be repositioned to embark on a path towards fiscal independence. On the cost side, the pressure is to cut costs, starting with the commitment to eliminate, once and for all, the menace of ghost workers by BVN checking of payroll and the requirement that all salary payments are made directly to individual accounts. This will enable states control the size of their wage bill and ensure that it is affordable. The formal commitments being made to improve expense management, greater efficiency in recurrent spending and prudent debt management will combine to ensure that states can move towards improved long term financial health. In the area of revenue, the FSP is based on the fundamental principle that each and every state in Nigeria must be economically viable. Accordingly, it recognises the fact that Internally Generated Revenue, IGR, must be maximised and we have extended the definition of revenue beyond the traditional confines of taxes, licences and fees.”she said