Refund of $2.1B Budget Support Loan Will Hurt State Economy – Governors

Governors have reached out to Central Bank of Nigeria (CBN) Governor Godwin Emefiele, asking him to halt the plan to start deducting the $2.1 billion budget support loan from allocations due to the states.

“States will collapse if this step is taken. The larger picture is that states won’t be able to pay salaries. Workers will go on strike and everything will be paralysed”, a governor, speaking on behalf of his colleagues, told the media last night.

Emefiele last week said state governments must begin to pay back the Budget Support Loans offered to them by the Federal Government.

He spoke in reaction to the claim by Edo State Governor Godwin Obaseki that the Federal Government printed about N60billion to augment the March revenue before it was shared by the Federation Account Allocation Committee (FAAC) to the Federal, States and Local Governments.

But, from the fact-sheet released by the Progressive Governors Forum, the total distributable revenue for March was N596.94billion.

The forum said due to the shortfall in gross statutory revenues compared to the previous month “an augmentation was made in the sum of N8.65 billion from the Forex Equalization Fund Account.

It said the augmentation brought the total distributable revenue to N605.59 billion.

An investigation by the Nations showed that most governors were shocked by the decision of the CBN to start deducting the $2.1billion loan.

It was learned that apart from personal calls to Emefiele, members of the PGF waded in the controversy generated by Obaseki’s claim.

The PGF statement carpeting Obaseki was said to be part of the rapprochement to the CBN so that the apex bank will stay action on the refund.

PDP governors yesterday gave their backing to Obaseki and chided Emefiele, describing his reaction as “vengeful” and “vindictive”.

A governor, who spoke in confidence with our correspondent, added: “We have already reached out to the CBN governor to stay action on the refund of the $2.1billion. It was apparent that the position of the CBN was a retaliatory action, following Obaseki’s claim.

“Emefiele was obviously angry because Obaseki is in a vantage position to know the truth. At the Nigeria Governors Forum (NGF) level, Obaseki and Governor Nasir El-Rufai of Kaduna are in charge of the committee liaising with the Nigerian National Petroleum Corporation (NNPC) and others. They have the vital indices and they have a full grasp of what is at stake. Their contributions have also been helpful to the government and the NGF members. The anger is based on the fact that Obaseki as an insider should not be Mr. Clean.

“It is not in the interest of all the 36 states and the Federal Capital Territory (FCT) to allow the controversy to linger.

“We are hopeful that Emefiele will look at all the economic indices and defer the refund of the $2.1billion to a timeline when the nation’s economy would have fully recovered from the recession. So far, the economy is fragile and states cannot afford to refund the $2.1billion. The capacity is not just there for us.

“Our total budget is equivalent of about $26billion. The annual budget for the agricultural sector in Brazil alone is about $56billion out of that country’s budget of about $264billion. What the governors are saying is that the Federal Government and the states should collaborate to put the economy back on a sound footing before we start talking of a $2.1billion refund. We all have a lot to do to reset our economy.”

The governor said the CBN is aware that about N120billion (belonging to the Federal Government, the states and the Federal Capital Territory) is being deducted monthly from the cash in the Federation Account for petrol subsidy.

The governor explained that the shortfall from FAAC may linger unless both the Federal Government and the states come together to resolve the issue of fuel subsidy.

The source added: “Despite the increase in oil price, the distributable revenue in the purse of FAAC is not enough for the states because N120billion (belonging to the Federal Government, the states and the Federal Capital Territory) is deducted monthly for fuel (Premium Motor Spirit) subsidy.

“We are already paying about N1.3trillion per annum as fuel subsidy. This means the money we should have used for capital projects is being wasted on subsidies.

“Yet, we hardly consume 60 percent of the refined products. Others are sold in neighboring countries. It is either we remove fuel subsidy or continue to live with the subsidy and shortfall in distributable revenue.”