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'States will seek FG bailout deal'

12 October 2013, 15:52

Abuja - The state governments may request a bailout from the federal government after debts spiral out of control, the chairman of the Forum of Commissioners, Federation Accounts Allocation Committee (FAAC), Timothy Odah, has said.

Oduah made the disclosure when he address newsmen after the monthly FAAC meeting, which distributed two months revenue to the three tiers of government in Abuja on Friday.

He said several states were indebted to contractors and the dwindling revenue from Nigeria’s oil and non-oil earnings had exacerbated the problems.

"The year is almost ending, most states owe contractors and they are causing problems,’’ he said.

Odah also called on the Central Bank of Nigeria to review its monetary policy that mandated states to deposit 50 percent of public accounts with the apex bank.

He criticised the new policy, saying, "it is very demoralising and affecting the states so much.

"The compulsory deposit of 50 percent has heightened the coupon rates on facilities taken by the public offices or states especially.

"We have interest rates going up to 20 percent to 24 percent and this is not good for the states.  The policy is given us a very harsh experience.

"Banks are not given us facilities because of the federal government policy that requests bank to get clearance from the federal ministry of finance before giving facilities to states,’’ he said.

Odah, who is the commissioner for finance in Ebonyi, thanked the federal government for increased allocation to security in the wake of insurgency and terrorism in the country.

He said security allocation in some states had taken a large part of public funds and that had created problem for other sectors.

"Security now takes 25 percent of the budget in most states,’’ he said.

On the crisis in FAAC over shortfall in allocation, Odah said though some of the issues had been resolved, but that "the problem is far from being over."

He said allocation for the months of August and September were shared at the Friday FAAC meeting to the three tiers of government.

He said the moratorium on augmentation was reflected in the distribution as FAAC would, henceforth, share the actual and not budgeted revenue to the tiers of government.

The forum chairman told newsmen that in the past four months, the FAAC meeting had not received the forensic statement of accounts from the Post Mortem committee.

"For the past four months, the postmortem committee of FAAC suspended its work because of the nationwide tour of the Revenue Mobilisation, Allocation and Fiscal Commission (RMAFC).

"In view of that, we are not receiving the forensic statement of accounts from the post mortem committee.

"At the same time we have asked the minister of finance to consider bringing in PPPRA into the forum of FAAC so that conflicting statements would be ironed out,’’ he said.

Odah said the present revenue challenge of the country was a clarion call for all tiers of government to be less dependent on revenue from oil, but move toward economic diversification.

The forum chairman advised states to focus more on the priority areas of their budget after the payment of salaries.

The News Agency of Nigeria (NAN) reports that earlier on Friday, the Federal, States and Local Governments shared N1.25 trillion from the Federation Account for August and September.

A breakdown of the amount showed that the federal government received N236.15 billion, States N119.78 billion, while local governments got N92.34 billion for September.

For August, the federal government received N248.27 billion, States N125.92 billion and local governments N97.08 billion.



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