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FG Bars States Owing Salaries From Accessing $2.7bn Paris Club Refund

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The federal government has told state governments that they must clear the backlog of salaries and other related staff arrears before they would be able to access the remaining $2.69 billion Paris Club Refund.

The director of information, Federal Ministry of Finance, Mr Hassan Dodo, who revealed this yesterday in Abuja, said that the federal government would commence phased payments of the refund to the states once this condition and others were met.

LEADERSHIP learnt that other conditions for accessing the fund include repayment of budget support loans granted in 2016 and clearing of amounts due the Presidential Fertiliser Initiative.

In a statement issued by the Federal Ministry of Finance and signed by the director of information in the ministry, Mr Hassan Dodo, the government also said payment of the approved amount would be made in phased tranches to states that meet the requirement.

“The final approval of $2.689 billion is subject to the following conditions: salary and staff-related arrears must be paid as a priority; 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 and 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”,  it said.

The ministry recalled that the issue of Paris Club loan over-deduction had been a long-standing dispute between the federal government and the state governments dating back to the period of 1995 to 2002.

It recalled that President Muhammadu Buhari had directed that the Debt Management Office (DMO) should formally and individually reconcile the claims of over-deduction, with reconciliation starting 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 released to them between December 1, 2016 and September 29, 2017 to enable them clear salary and pension arrears, as fiscal stimulus to ensure their financial health.

The ministry, however, did not give any detailed explanation on the alleged refund to Osun State recently, which had generated reactions in the country.

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