Governors of the 36 states of the federation are seeking a variation of the budget support loan repayment, which they say will compound the many challenges they are currently facing.
They made their position known on Tuesday, at this month’s meeting of the National Economic Council, presided over by Vice President Yemi Osinbajo.
The Governors rejected the proposed monthly repayment of N164 Billion, stressing that the states could not cope with the stiff condition.
They also kicked against the proposed plan by the Federal Government to extend the repayment period from 20 to 30 years.
Minister of Finance and Budget Planning, Zainab Ahmed, who disclosed this while briefing State House Correspondents at the end of the meeting, said based on the extension, state governments’ monthly repayment will reduce from N252 to N162 million monthly.
The Minister further disclosed the negotiations are ongoing, to see how the matter can be resolved amicably.
Ahmed said the Federal Government had made the N252 million deductions in September and October based on the 20 years repayment period.
Following outcry by Governors, another repayment plan extending the schedule to 30 years and with repayment of N162 million was presented to NEC.
Ahmed acknowledged that the states Governors were not satisfied with the repayment extension to 30 years.
She said: “The budget support facility was initially for 20 years repayment period. When we made the first deduction in September, the states had complained that the amount deducted, which was N252 million, was too harsh.
“So, since then, the Central Bank of Nigeria, which is the lender, has revised the condition to make the repayment period longer. The new repayment period is 30 years. This means that the states will be paying monthly N162 million. But today, the states still were not satisfied with the condition.
“So, we are expecting that the Federal Ministry of Finance, Budget and National Planning, CBN and the states will engage again with the view of having the CBN further revise the condition to reduce the monthly repayment burden.”
She said at Tuesday’s meeting, the ministry urged NEC to note the request for N997, 490,780.00 by FAAC Sub-committee on International Public Sector Accounting Standards (IPSAS) as post-implementation support to the three tiers of government.
Ahmed said the Federal Executive Council (FEC) had already directed that the three tiers of Governments adopt the provisions of IPSAS.
She also disclosed the country’s account balances as follows:
“Excess Crude Account (ECA) balance as at 22nd October, 2019 = $324,035,696.29, Stabilization Fund Account balance as at 22nd October, 2019 = N28, 560, 710,627.55, Natural Resources Development Fund Account balance as at 22nd October, 2019 = N70, 691, 826,511.84.”
The Finance Minister said she presented a memorandum to the Council seeking its approval of N775, 060, 080.00 budget estimates of the Federation Account Allocation Committee (FAAC) meetings and other related activities for the year 2019.
Earlier at the Nigerian Governors’ Forum’s (NGF) Peer-Learning Event organised to share ideas, improve revenue generation and curb leakages, the Federal Government and Governors brainstormed on strategies for shoring up revenues from the non-oil sector and curbing persistent revenue shortfalls.
At the peer-learning event, the minister, who unfolded Federal Government’s plan for tax law reform, disclosed that a bill has been transmitted to the National Assembly on the Value Added Tax (VAT) increase.
Also, the World Bank gave hints on how to improve revenue generation.
Ahmed identified key constraints to revenue generation, including “low effective tax rates, archaic tax laws that are not evolving at commensurate pace with businesses, leakages in revenue collection systems, low tax compliance rates and poor tax morale.”
The minister said Nigeria needed robust, tough, well-coordinated and multi-faceted reforms to achieve a turnaround.
“Nigeria needs a lot of resources to actualise the Economic Recovery and Growth Plan (ERGP) and other development plans, which are at risk of being underfunded. Regarding the 2019 budget, as at 30th June, the actual aggregate revenue as per our Fiscal Accounts was N2.04 trillion, indicating a revenue shortfall of 42 per cent,” she said.
On the plan to reform existing tax laws and raise VAT, Ahmed said when compared with its peers, Nigeria is “lagging on most revenue streams, including VAT and excise revenues as we not only by far have, one of the lowest VAT rates in the world but weak collection efficiencies.”