The 23 conditions states must meet before receiving N90bn loan

The Federal Government has indicated its readiness to release N90 billion loan facility to state governments to reduce their dependency on monthly allocations from the Federation Account.

Finance Minister, Kemi Adeosun, while speaking at the Stakeholders Meeting held with Commissioners for Finance on the Fiscal Sustainability Plan (FSP), said, “The amount of the loan is N50billion for three months to be shared across the 36 states, including FCT and then N40billion for nine months.”

The funds will however, not be doled out to the state government by the Federal Government until certain conditions are met after which the loan will be given over one year and will be repaid over an unspecified period of time.

This is to ensure that the loan is used for the purpose for which it was given out.

See the 23 conditions below:

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 privatisation 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 issuances 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.

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