FG secures N90bn conditional loan for states + conditions to be met inorder to access the loan

   

   The Federal Government on Tuesday announced that it had secured a N90bn conditional loan from  the private sector for state governments through the issuance of bonds in the bond market.

    The Minister of Finance, Mrs. Kemi Adeosun,explained that the money to be released to the states was not a bailout like the one it gave out last year, but a loan that was guaranteed by the Federal Government to be provided by the private sector through bond subscription.

     She said based on the agreement with the state governors and the commissioners of finance, 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, with each state expected to receive the sum of N1.1bn.She also pointed out that the release of the funds was tied to very stringent conditions that were requested by the private sector investors.


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   Here is a list of all conditions that state governors have to fulfill to access the Federal government's N90 billion loan that was announced by Minister of Finance.The conditions include;


1. Publish audited annual financial statements within nine months of financial year end.
2. Comply with the International Public Sector Accounting Standards (IPSAS)
3. Publish state budget online annually
4. Publish budget implementation performance report online quarterly
5. Develop standard IPSAS compliant software to be offered to states for use by state and local governments
6. Set realistic and achievable targets to improve independently generated revenue (from all revenue generating activities of the state in addition to tax collections) and ratio of capital to recurrent expenditure
7. Implement targets
8. Implement a centralised Treasury Single Account (TSA) in each state
9. Have quarterly financial reconciliation meetings with federal government to cover VAT, PAYE remittances, refunds on government projects, Paris Club and other accounts
10. Share the database of companies within each state with the Federal Inland Revenue service (FIRS). The objective is to improve VAT and PAYE collection
11. Introduce a system to allow for the immediate issue of VAT/WHT certificates on payment of invoices. Review all revenue related laws and update obsolete rates/tariffs
12. Set limits on personnel expenditure as a share of total budgeted expenditure
13. Biometric capture of all states’ civil servants will be carried out to eliminate payroll fraud
14. Establish efficiency unit
15. Federal government online price guide to be made available for use by states
16. Introduce a system of continuous audit (internal audit)
17. Create a fixed asset and liability register
18. Consider privatization or concession of suitable State-owned enterprises to improve efficiency and management
19. Establish a capital development fund to ring- fence capital receipts and adopt accounting policies to ensure that capital receipts are strictly applied to capital projects
20. Domesticate Fiscal Responsibility Act (FRA) 21. Attainment and maintenance of a credit rating by each state of the federation
22. Federal government to encourage states to access funds from the capital markets for bankable projects through issuance of fast- track Municipal bond guidelines to support smaller issuance and shorter tenures
23. Comply with the FRA and reporting obligations, including: No commercial bank loans to be undertaken by States; Routine submission of updated debt profile report to the DMO.