Unpaid Salaries: States to get Fresh Bailout from Federal Government With Tough Conditions

Unpaid Salaries: States to get Fresh Bailout from Federal Government With Tough Conditions

In view of the persistent inability of many states to pay salaries in the face of the economic crunch in the country, the federal government is set to provide another round of bailout funds albeit with strict conditions.

The federal government had in 2015, shortly after President Muhammadu Buhari took office, issued bailout loans through the Central Bank of Nigeria (CBN) to enable the states clear backlog of salaries but a number of states remain hugely indebted to workers.

According to The Nation, the fresh financial support facility announced by the federal ministry of finance on Saturday will only be released after the states comply with a 22-point reform agenda tagged the Fiscal Sustainability Plan (FSP).

The FSP is said to have been endorsed by the states at a recent meeting of the National Economic Council (NEC). Conditions to be met include the publication of audited financial statements and budgets, bio-metrics, and Bank Verification Number (BVN) payroll review exercises for the workers. States are also expected to restrict recurrent expenditure.

The applying states are equally expected to set and meet targets to enhance their Internally Generated Revenue (IGR), establish Efficiency Units to reduce overhead costs, privatise state-owned enterprises, domesticate the Fiscal Responsibility Act, and put a limitation on further bank loans.

The finance ministry further stated that the federal government has agreed to develop an International Public Sector Accounting Standards (IPSAS) compliant software for the states’ use.

The ministry is also developing new bond issuance guidelines to ease access to the capital market for states wishing to fund developmental projects.

Finance minister, Mrs Kemi Adeosun who stressed the necessity of the survival of states, 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.”