FG Lists Conditions for Release of Outstanding Paris Club Refund

Muhammadu Buhari

Silent on alleged secret payment to Osun State

Ndubuisi Francis and Flourish Arinzechi in Abuja

The federal government Tuesday listed conditions for the release of the last tranche of the Paris Club refund to states, putting the outstanding at US$2.689 billion.

The government however kept mum on the allegation that it made a clandestine release of N16.67 billion to Osun State ahead of the September 22 governorship election in the state.

Paris Club refund is a partial settlement of long-standing claims by state governments relating to over-deductions from their Federation Account Allocation Committee (FAAC) payments for external debt service between 1995 and 2002.

In a statement issued by its Director (Information), Hassan Dodo, the Ministry of Finance said the final approval of US$2.689 billion of the Paris Club refund to the states is subject to certain conditions.

These include the states making the payment of salary and staff-related arrears a priority.

Others are: Commitment to the commencement of the repayment of Budget Support Loans granted in 2016, to be made by all states;

*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 payment of the approved amount, the statement stressed, is to be made in phased tranches to the states.

According to the federal government, the issue of Paris Club loan over-deductions had been a long standing dispute between it and the state governments which dated back to the period between 1995 and 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 (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 approved that 50 per cent of the amounts claimed by states be paid to enable the states clear salary and pension arrears.

“This was released between December 1, 2016 and September 29, 2017. This refund was part of the government’s fiscal stimulus to ensure the financial health of Sub-National Governments,” the statement noted.

The DMO, it added, led the reconciliation process under the supervision of the Federal Ministry of Finance, stressing that the final approval of US$2.689 billion is subject to some conditions.

According to a media report over the weekend, some state governors across party lines are presently fretting over an alleged secret payment of N16.67 billion, said to be the last tranche of Paris Club refund to the Osun State government.

The alleged secret payment to Osun State, they argue, was made to give the state government some advantage to prosecute the September 22 governorship election.

Although the statement released yesterday was an apparent response to enquiries by THISDAY and those of other media houses for the reaction of the ministry on the alleged secret refund to Osun State, the ministry was silent on the issue.

In March 2018, the federal government claimed that it had paid a total of N1.9 trillion to the 36 states of the federation as support from the Paris Club refund.

The Vice President, Prof. Yemi Osinbajo, made the disclosure in his address at the fourth session of the Ogun Investors’ Forum in Abeokuta.