EDITORIAL: States And The Paris Club Refund

With the release of second tranche of Paris Club Loan Refunds on Tuesday, the Federal Government took another big step to relieve the states of their lingering insolvency.  Announcing the release, Director of Information, Federal Ministry of Finance, Salisu Dambatta, confirmed that N243.79bn had been released to the 36 state governments and the Federal Capital Territory bringing the total so far disbursed to N760.17bn. Just like the first tranche, the five states of Akwa Ibom, Bayelsa, Delta, Kano, and Rivers took the lion share of 20 percent with N10bn each. The state of Osun got N6.31bn.

Not surprisingly, the rumour mill has literally swung into overdrive with mischief-makers bandying all manners of figures on the amount released, despite the publication of the figures in major newspapers.  The idea obviously is to force the hands of Governors to do the bidding of special interests often at to the detriment of the collective interests. Before now, the Governors were accused of either taking the money under the cover of darkness even when no kobo had been released, or stealing a huge chunk of it even when no concrete proof is on ground. Such is the nation these days – such that truth is not only sacrificed on the altar of emotions but also elasticated.

Given the exaggerated expectations from the citizens particularly the organised labour which has been at the forefront of the agitations, we find it necessary again to restate what the refund is all about –what it is meant to cater for from what is not.

Nigerians would recall the country’s exit from the Paris Club of Debtors in 2005. Shortly after the celebrated exit, it emerged that most states had overpaid their share of the loans,there was a clamour to have full refund of the excess paid.  Although the clamour predated the current administration, it reached its crescendo as a result of the crushing insolvency which the states found themselves courtesy of the current economic recession. With meaningful developmental activities in the states virtually grinding to a halt, President Muhammadu Buhari magnanimously ordered the refunds to be made to relieve the states of their financial burden particularly that of salaries and pensions.

Therefore, the refund, far from being a cure-all pill, was a sort of palliative to augment the shortfalls brought on by the shrinking accruals into the federation account. To that extent, the expectations that it would address long-term issues of fiscal insolvency are not only misplaced but baseless.

 Of course, we understand the obligations of the Governors to clear outstanding arrears of workers and pensioners both as a strategy to put life back into the economies of the states and also to relieve the pains of the distraught workers. The question really is whether the Paris Club refund or any windfall for that matter can provide the kind of relief being sought by the workers on a sustainable basis given that the problems are of a structural nature. If, as in this case, the answer is negative, the Governors are right to press for understanding by the workers in their efforts to chart a sustainable way out of the current economic crisis. After all, the refunds will come and go leaving the task of weaning the states off their dependence on federal allocations behind for the governors to contend with.

Much as the workers would rather have their arrears upfront, we counsel them to see reason with the Governors in their resolve to devote a sizeable chunk of the loan refunds on capital projects to guarantee their future as indeed those of the generations to come.