A conditional Budget Support Facility to provide financial relief to state governments is being finalised by the federal government, the Ministry of Finance has said.
A statement from the ministry of finance on Saturday, explained that the proposed facility, aimed at providing support to overcome the current financial challenges faced by several states, would be subject to the states meeting a stringent 22-point reform agenda called the Fiscal Sustainability Plan (FSP).
The statement disclosed that the FSP was unanimously agreed by state governors during the National Economic Council meeting held on May 19 and it encompasses a framework of reform measures including the requirement to publish audited financial statements and budgets, biometric and Bank Verification Number (BVN) payroll review exercises to sanitise payroll costs, as well as limits on recurrent expenditure levels.
Other conditions listed include the requirement that states set and meet targets to enhance Internally Generated Revenue (IGR), the establishment of Efficiency Units to reduce overhead costs, privatisation of state-owned enterprises, domestication of the Fiscal Responsibility Act and limitations on securing further bank loans.
“On its part the federal government has agreed to develop IPSAS-compliant software for states to use, and to develop new bond issuance guidelines to ease access to the capital market for states wishing to fund developmental projects.
“Disbursements will be conditional upon states meeting their agreed targets and will be subject to monitoring and evaluation by independent monitoring agents. States that fail to meet the agreed reform targets will be excluded from further funding.
“The FSP mirrors the public financial management reforms currently being pursued at the federal government level and is expected to set the states on a path towards long-term fiscal sustainability,” the statement added.
