BEVERLY HILLS, June 11, (THEWILL) – The Federal Government on Saturday disclosed that it is finalising a conditional Budget Support Facility to provide financial relief to governments of the thirty-six states so as to help them overcome the current financial challenges.
The facility will however be subject to States meeting a stringent 22 point reform agenda called the Fiscal Sustainability Plan, FSP, which was unanimously agreed by State Governors during the National Economic Council meeting held on 19th May, 2016.
It encompasses a framework of reform measures including the requirement to publish audited financial statements and budgets, biometric and BVN payroll review exercises to sanitise payroll costs, as well as limits on recurrent expenditure levels.
A statement forwarded to THEWILL from the Ministry of Finance reports that based on other reforms, States would be required to set and meet targets to enhance Internally Generated Revenue, IGR, the establishment of Efficiency Units to reduce overhead costs, privatisation of State Owned Enterprises, domestication of the Fiscal Responsibility Act and limitations on securing further bank loans.
On its part, the Federal Government has agreed to develop IPSAS compliant software for States to use, and to develop new Bond Issuance guidelines to ease access to the Capital Market for States wishing to fund developmental projects.
Disbursements will be conditional upon States meeting their agreed targets and will be subject to monitoring and evaluation by Independent Monitoring Agents. States that fail to meet the agreed reform targets will be excluded from further funding.
The FSP mirrors the public financial management reforms currently being pursued at the Federal Government level and is expected to set the States on a path towards long term fiscal sustainability.
The Minister for Finance, Kemi Adeosun said: “The FSP represents an important programme of reforms that will develop best practice financial management across all tiers of Government and will improve transparency and accountability. We are determined to attain financial discipline across government and implementing the FSP at State level will ensure alignment.
“The focus on increasing revenue, which is not limited to conventional taxes, but rather encourages states to explore opportunities in areas such as Agriculture and Solid Minerals, is line with our diversification objectives.
“The targets for cost management and improved efficiency will deliver value for money and will yield long term savings. Overall we believe that the survival of State Governments is essential to the economic recovery of Nigeria, specifically their ability to meet salary obligations.”
