By Favour Nnabugwu
The federal government has paid the sum of $138.5 million to 30 State governments under the States Fiscal Transparency Accountability and Sustainability (SFTAS),
(SFTAS), is a facility of the World Bank to reward for the State governments of their efforts towards sustainable public debt management.
Dr. Isyaka Mohammed of the Debt Management Office (DMO) said in Abuja, that the states were paid for meeting the requirements for debt related Disbursements Link Indicators (DLIs).
The state governments (which were not named) received the performance-based grants in 2018 and 2019.
In 2018, the benefiting states, received $29.5 million grants for meeting the requirements of DLI7, $1 million for DLI8 and $24 million for scaling through DLI9.
In 2019 the affected states received a total of $84 million as performance based grants broken down as $51 million for DLI7, $7 million for DLI8 and $25.5 million for DLI9. Thus bringing the total grants extended to the state governments to $138.5 million.
Dr. Mohammed identified the three debt-related Disbursements Link Indicators as (DLI) 7, 8 and 9.
According to him, DLI 7 focused on strengthening public debt management and fiscal responsibility framework for the state governments.
He added that DLI 8 was designed to improve the clearance/reduction of stock of domestic expenditure arrears of the state governments; DLI 9 was meant to mprove the debt sustainability of the various states.
Dr. Mohammed said, “a combination of tools and approaches to support the State Governments in achieving the minimum requirements for the DLIs it supports” were employed.
The tools and approaches he identified were: guidelines; template and tools; physical or virtual workshops; and just-in-time advisory.
He explained that for DLI7.1 in 2018, 10 states met the three criteria for the legal framework, while in 2019, 23 states met the three criteria.
For DLI7.2, a total of 19 out of 24 eligible states submitted quarterly debt report within 2 months of the end of the quarter in 2018.
According to him, “States’ adherence to the provisions of the Fiscal Responsibility Act on contracting state debts remained a major concern.”
He added that the capacity and willingness of the state governments to prepare their Debt Sustainability Analysis (DSA) and Preparation of Medium-Term Debt Strategy (MTDS) also remained a challenge.
Dr. Mohammed suggested that debt reconciliation should be institutionalized with a standing committee comprising the staff of the DMO, Central Bank of Nigeria (CBN) the Federal Ministry of Finance and the Office oftheAccount- General of the Federation.
However in 2019, 31 out of 32 eligible states met the two months deadline and in 2020, only 15 met the DLR 7.2 requirement because the criteria became more stringent due to the inclusion of Debt Sustainability Analysis
Despite the encouraging performance of the state governments, Dr. Mohammed noted that there were still challenges to debt sustainability for the state governments