**ECA now $2.3bn
SUNDAY ODE, Abuja
The National Economic Council (NEC) meeting on Thursday suspended further deduction of state governments’ loans in their accounts maintained in the Federation Account.
Finance Minister, Mrs. Kemi Adeosun, said that state governments’ loan repayment to the Federation Account was deferred to allow states have enough money in their vaults to pay workers salaries and meet other obligations in their states.
It would be recalled that before now many of the 36 states have taken loans which is normally deducted in parts from the amounts monthly accruing to them in the Federation Account.
She spoke with State House correspondents at the end of the NEC meeting chaired by Vice President Yemi Osinbajo at the Presidential Villa, Abuja. She was accompanied by Nasarawa State Governor, Tanko Almakura and Corp Marshal of the Federal Road Safety Commission (FRSC), Oyeyemi Boboye.
She said, the current economic crisis in the country necessitated the deferral of the loans repayment.
“On the update of the financial situation of the states, it was discussed extensively that currently the Federation Account receipt are among the lowest that has been seen in recent memory. We are looking at N299 billion this month and that is because of the very low oil prices that was recorded in January and February.
“If you remember oil prices went as low as $28 and $31and of course that has led to very low Federation Account as a result of which I approached the President and the governors that we defer the loan deductions from the Federation Account entitlement.
“The aim of this is to ensure that we support them through this difficult period to be able to meet salary obligations. The government is very committed to stimulating the economy and recognizes the ability of states to meet salary obligations is a very important part of getting the economy moving again.
“To that end the President approved that deferral. The states have been asked to submit financial data that would allow us to module and predict how much support in terms of loan deferrals we might need to give just to get through this period until the economy recovers,” she said.
She said that it was not a bail out but a deferral or postponement of deductions to allow the states have the money they need to meet their salary obligation adding that all the governors endorsed the request to provide financial data, and to work on biometric and other initiatives to clean out fraudulent entries on their payroll like ghost workers.
On how long the deferrals will last and their possible consequences on the nation’s treasury, she said: “The approval I have is for the current month but with a proviso. What we discussed is the current situation in the economy requires some actions and what we need to do is to understand the financial profile of states in detail so that we can understand how long we need to support them with loan deferrals.
“On the effect of the deferrals on the economy, I think I will switch to say what is the effect of non-payment of salaries on the economy; that for us is really the issue. We have to put money into people’s pocket so that people start spending just to get the economy moving.
“Nobody stimulates the economy by austerity but by spending. So in some states as you know the state government is the highest employer of labour. So, if the state government is unable to pay, nothing happens. We have prioritised getting the states back into good financial health.
“Now part of that is this commitment to fiscal sustainability and that is why we have asked the states to commit to cleansing their payroll, commit to efficiency, maximizing their Internally Generated Revenue.
“We have asked them to give us their financial data so that we can work together to create financial module and understand what government needs to do to support the states.
“Of-course we are borrowing, but we have got to make sure that we are borrowing to support the states that are fiscally sensible and prudent in their managing money. So the answer is we have a month guaranteed but we are asking for information from states to enable us build a module so that we would know if it is three months, six months or however many months to supplement the shortfall to ensure that within reasonable parameters majority of states can pay salaries.
“And that is taking into account that different states have different obligations and different profiles, but the idea is to support them to be able to pay,” she said.
She said that she presented a report on the balance of the Excess Crude Account, ECA to NEC, which she said stood at $2.3 billion.
On his part, Al-Makura said that one of the issues discussed during the NEC meeting was power supply.
He said that NEC reconstituted the Board of the Niger Delta, Power Holding Company (NDPHC) to facilitate effective power distribution across the country.
He said: “There was a unanimous acceptance of the recommendations and reconstitution of the Board to include one governor from each of the six geopolitical zones. For the North Central Zone, we have Plateau to represent: for the North East zone, we have Adamawa governor ; North West, we have Kebbi State; South East, we have Anambra; South West we have Lagos and South South, we have Edo.”
He said that the committee has since been inaugurated by the Vice President.
He said that NEC also discussed bail out matter while the CBN Governor, Mr. Godwin Emefiele gave an update about those states that have been able to access salary bail out which is put at about N689.5 billion.
Additional N310 billion, he said, has been disbursed as Excess Crude Account-backed loans to States.
The FRSC Corps Marshal said that the Council approved the Nigerian Road Safety Strategy document of 2014-2018.