Adeosun: $4bn Paris Club refund shared transparently

Finance Minister, Mrs Kemi Adeosun, said the Federal Government had consistently complied with all extant rules and regulations in the disbursement of the Paris Club refunds to state governments.
In a statement by her Special Adviser, Media, Mr Festus Akanbi, on Monday in Abuja, Adeosun said the Federal Government’s disbursement process was transparent and targetted at the attainment of specific economic objectives.
The funds refer to the accumulated refund of the debt service deductions in respect of the Paris Club, London Club and multilateral loans of the federal and state governments between 1995 and 2002.
The Federal Government had explained that states were overcharged during the 2005 Paris Club for debt relief under the Obasanjo administration.
Following verification, President Muhammadu Buhari approved the release of N522.74 billion first tranche to states as refunds, pending reconciliation of records. Therefore, each state was entitled to N14.5 billion, being 25 per cent of the amounts.
Adeosun said the claims with regard to over deductions had been made to the Federal Government consistently since 2005.
“The Debt Management Office (DMO) initially requested 22 months to complete the reconciliation and facilitate disbursement.
“However, President Buhari, considering the plight of salary earners and pensioners and the need to stimulate the economy, directed that the exercise be completed within 12 months.
In addition, the President gave an express Anticipatory Approval for the release of up to 50 per cent of the claim of each state, pending final reconciliation.
“That reconciliation is undertaken by the DMO, Office of the Accountant General of the Federation (OAGF) and the relevant state governments.
“Accordingly, the disbursements are staggered in batches and payments are only made when the claims of each state have been reconciled with the facts at the disposal of the Federal Government,” she said.
Adeosun said that available records showed that some states had been paid either in full or in part, under previous administrations, so necessitated a more detailed review for the states in question.
She said that the release of the first tranche, representing up to 25 per cent of claims, was N522.7 billion commenced in December 2016.
“Disbursement was subject to an agreement by state governments that 50 per cent of any amount received would be earmarked for the payment of salaries and pensions.
“In addition, each governor gave an undertaking that excess payments would be recovered from the Federal Accounts Allocation (FAAC), if the final reconciliation found that the amount paid under the Anticipatory Approval exceeded that due.
“To date, nine batches have been processed while some balances remain outstanding to the possible credit of a number of states,” she said.
Adeosun said that given the foregoing, complete and final figures would only be released and published after each state and the Federal Government had reconciled and agreed on the sums due.
At the National Economic Council meeting on March 16, Buhari directed her and the Central Bank Governor to commence the process of resolving the balance of the approved amount.
She said the overriding consideration for any further releases would be the current and projected cash flows of the federation as well as the outcome of the independent monitoring of the compliance with terms and conditions attached to the previous releases.
“The Minister of Finance will like to reaffirm the commitment of the administration to publish all relevant information on the Paris Club refunds,” she said.