The ministry of finance has said that states have to repay budget support loans granted in 2016 and pay workers’ salary arrears before they can access the $2.689 billion Paris Club Refund disbursement.
The other conditions are clearing of amounts due to the Presidential Fertiliser Initiative (PFI) and commitment to clear matching grants (counterpart funds) from the Universal Basic Education Commission (UBEC) to improve basic education.
In a statement in Abuja on Tuesday, the director of information in the ministry of finance, Mr. Hassan Dodo, said the government will pay the approved cash to the states in tranches.
The statement reads: “The issue of Paris Club loan over-deduction had been a long standing dispute between the Federal Government and the state governments which dated back to the period of 1995 to 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, President Buhari, had approved that fifty per cent (50%) of the amounts claimed by States be paid to enable the states to clear salary and pension arrears,” he said.
He said the money 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 DMO led the reconciliation under the supervision of the Finance ministry,” he added.