Members of the public, as well as stakeholders, have been deliberating on whether or not the recent issuance of Paris Club refunds by the Federal Government to the State Government is backed by the law.
Speaking against the bailout, former Chairman, Revenue Mobilization Allocation and Fiscal Commission, (RMAFC), Engr. Hamman Tukur, labelled the bailout funds to State Governments illegal.
“Buhari gave out a lot of money to states recently in the name of bailout. Who gave him that money? How did he get access to the Federation Account, or the authority to release that money? Did he go through appropriation for approval? If he released the money before it was approved, then it is illegal”
“In any case, who told the states to be broke? Who stole their money? He (Buhari) should have asked the state governors where their money was”.
He recalled that RMAFC rejected such move, during the Obasanjo-led administration.
“I think it was only when Obasanjo asked for $5.3 billion to finance NIPP (National Integrated Power Project) that the Commission said he cannot take it from the Federation Account without recourse to the other tiers of government”
“We told him that if he wanted any money, he should take it from the Federal Government’s share of the money, and then go to the National Assembly for approval”
“You are aware of the recent bail-out by the Federal Government to states. The president should tread softly. We have to caution President Buhari the same way we did to Obasanjo when he wanted $5.3 billion”.
Meanwhile, Nigeria Governors Forum, through its Head of Media and Public Affairs, Abdulrazak Barkindo, said bailout funds were legal stating that it is a legitimate way of reviving the economy.
“Bailouts also effectively reignite economic activity in cases where the economy is experiencing a downturn, just as Greece was recently bailed out by the European Union, EU.
“Let’s not also discount the fact that when the US government bailed out GMC, an auto giant, Americans called it Government Motor Corporation. So, bailouts are perfectly legal”.
Ace Lawyer, Femi Falana, says bailout is a loan to the State which must be paid back by the State Government that given such funds, when the economy improves. He however noted that there is a difference between bailout funds and the Paris Club Refunds.
“The bailout fund is different from the Paris Club refund given to the States. The Federal Government paid out money to London and Paris Clubs, which were deducted from the Federal allocations meant for the States without consultation with the States and the Local Governments, which made them sue the FG”.
“But the two parties eventually agreed on out-of-court settlement. That is Paris refund. The first one (payment) was also part of the fund shared from the LNG money from the Federation Account.”
Chairman, Centre for Anti-Corruption and Open Leadership, (CACOL), Debo Adeniran also took the position that the refunds were not illegal, since the Federation Account belongs to the three tiers of Government.
“That does not mean we should continue that way so that the states would continue on a kind of feeding-bottle federalism”.
Senator representing Imo East senatorial Constituency, Samuel Anyanwu, last week raised a motion querying the legality of the Paris funds given to State Governors by President Muhammadu Buhari.
The Senate however resolved to probe how the Paris Club refunds and other bailouts to the State Government were approved.
The President of the Senate, Senator Bukola Saraki, sought and got the leave of his colleagues to approve that a proper motion be brought by Anyanwu, to the floor on another legislative day.
There are some reports that some States squandered the funds, leaving Civil Servants unpaid for months, thereby defeating the aim of the bailout.
President Buhari in the first tranche of the refunds approved the release of N516bn to the 36 states and the Federal Capital Territory, FCT.
A total of N243.795bn was also released to the States in the second tranche as part of the wider efforts to stimulate the economy and support States in meeting up with prompt payment of salary and other obligations.
A bailout is a situation in which a Government offers money to a failing Government to prevent the consequences that arise from the Government’s downfall.
Bailouts can be in form of loans, bonds, stocks or cash and may require reimbursement.
