The Federal Government says it has refunded over N700bn to state governments for the development of federal infrastructure across all states of the federation.
The Federal Government said it made the refunds to the states over the past six years.
The government said these in a titled ‘President Buhari Administration at Six’ obtained from the Federal Ministry of Finance, Budget and National Planning in Abuja.
Under the section on support to states that focused on infrastructure loans and refunds, the government said it had made ‘more than N700bn in refunds for federal road projects embarked upon by state governments’.
It further stated that the current regime had extended more than N2tn in bailout packages to state governments to enable them meet their salary and pension obligations.
This, it said, was especially in the face of dwindling oil revenues in the first three years of the regime.
The government stated that the support came in the form of Budget Support Facility of N614bn that was extended to the states and Paris club refunds of $5.4bn.
It said other forms of support included loan restructuring for facilities with Deposit Money Banks.
The government explained that in 2015, the Debt Management Office restructured DMBs’ loans with a total value of N575.52bn for 23 states to reduce the debt service burden on the states.
“In exchange for their loans to state governments, the banks were issued 20-year FGN Bonds at a yield of 14.83 per cent per annum,” it stated in the document.
The government added that the restructuring exercise benefited the states through reduction in the monthly debt service burden of states from between 55 per cent to 97 per cent for various states.
It said the beneficiaries also gained interest rate savings ranging from three per cent to nine per cent per annum; longer repayment period for the loans now converted into bonds; and, freeing up of needed cash to run the machinery of government.
The Federal Government’s support to states was, however, condemned by a former President of the Association of National Accountants of Nigeria, Dr Sam Nzekwe, who argued that states must grow their Internally Generated Revenues to augment their monthly federal allocations.
He said, “This should not be encouraged because they take their monthly allocation from the Federation Account. They should rather intensify the collection of their IGRs and generate more.
“By the way, most of the governors are talking about true federalism and restructuring, meaning that they will have to develop most of the resources in their states. So if you can’t generate funds, then your clamour for restructuring should be reviewed.”
Nzekwe said the Federal Government should not always listen to the states when they call for financial intervention, as this would make the states look inwards on how to boost their revenue generation.