The monthly disbursement of the N90bn conditional loan facility to state governments announced by the Federal Government on June 14 will cease any month the allocation from the Federation Account Allocation Committee exceeds N500bn.
The Minister of Finance, Mrs. Kemi Adeosun, had while announcing the conditional loan facility to states, said the funds had been secured from the private sector through the issuance of bonds.
Responding to enquiries from our correspondent on Sunday, the Special Adviser on Media to the Minister of Finance, Mr. Festus Akanbi, said it would not be financially prudent for loans to be disbursed in any month that over N500bn was shared among the three tiers of government.
He said once the monthly distributable revenue was up to the threshold of N500bn, the amount that would be available to each state government that month would be enough to run its programme.
Akanbi said, “The budget support facility, which is conditional upon the implementation of the 22-point fiscal sustainability plan, is not a bailout. The implementation of the FSP is to be completed over an 18-month period. Monthly disbursements to each state will be conditional on compliance with pre-agreed FSP milestones.
“The facility will cease to be available in the next month if the distributable amount from the Federation Account is equal to or exceeds N500bn in any given month.”
He added that 35 states were in the process of submitting the required documents for the facility.
Adeosun had said during a meeting with the commissioners of finance from the 36 states of the federation that the loan would be given within a period of one year.
The minister explained that based on the agreement with the state governors and the commissioners, N50bn would be released in the first three months where each of the 36 states would get about N1.3bn.
Thereafter, she noted that N40bn would be released over a nine-month period as the second tranche through the bond market, where each state would receive the sum of N1.1bn.
Since the beginning of this year, the monthly allocation from the Federation Account to the three tiers of government had not been too impressive.
Figures from FAAC put the allocation for January at N370.38bn, while February, March, April and May had N338.7bn, N299.7bn, N281.5bn and N305.12bn, respectively.