- Disagree on legality of President’s largesse
As controversy trails the N713.7billion bailout approved by President Muhammadu Buhari for the 36 states of the federation to clear backlog of workers’ salaries, lawmakers, economists and financial experts, have said that the affected state governors will still approach the Federal Government for more.
In fact, they asserted that the outstanding funds in the Excess Crude Account, ECA, was the target of the governors, adding that since they had succeeded in mounting pressure on President Buhari to release the $2.1billion (N413.7billion) from the Nigeria Liquefied Natural Gas, NLNG dividends, the state chief executives will turn their eyes on the ECA.
The experts however disagree on the legality of the President’s action in sharing the NLNG funds with the governors without appropriation by the National Assembly.
President Buhari had recently approved N713.7billion financial lifeline for the states to offset backlog of salaries to workers and to meet other needs.
The states will also receive soft loans of between N250billion and N300billion from the Central Bank of Nigeria, CBN while the Debt Management Office, DMO, will assist them to restructure over N660billion commercial loans.
In separate interviews with Nigerian Pilot on the legality of the President’s action and the possibility of the funds being judiciously used by the governors, former Senior Special Assistant on National Assembly to late President Umaru Musa Yar’Adua, Mr. Ibrahim Zailani, a financial expert, Mr. Sebastian Thomas, an economist, Mr. Henry Boyo and a banker, Mr. Timothy Afolabi, all lauded and knocked the Federal Government’s largesse.
According to Zailani, Buhari did not breach the constitutional provisions on the financial bailout for the states.
He argued that Section 162, sub section 4 of the 1999 Constitution (as amended) demands that all revenues, including the NLNG proceeds should be paid into the Federation Account like the Value Added Tax, VAT and can be spent without being appropriated by the National Assembly.
“The monies can be spent in accordance to the sharing formula by the three tiers of government, that is, the federal, states and local governments. The portion accruing to the federal government is paid into the Consolidated Revenue of the Federation Account, this is the one that cannot be spent unless it is appropriated by National Assembly,” he explained.
According to him, the President’s action was in the best interest of the country and in consonance with the constitution.
“There is no illegality in the bailout, but the area of controversy is that the President would have excluded the governors who were in office before May 29 from the bailout because they are part of the problems in their states”, he declared.
Zailani, a lawyer and former member of the House of Representatives, blamed the current controversy over the bailout on lack of adequate education and information from the Presidency, maintaining that the disbursement of the funds was within the confines of the law.
The lawyer also suggested that the solution to financial recklessness in the country was strengthening of the anti-graft agencies to make them more responsive to their statutory responsibilities as well as building the capacity of States Houses of Assembly to be able to check the activities of the governors and other agencies.
But Mr. Thomas said the presidential bailout violated the provisions of the 1999 Constitution on public finance.
Thomas, a financial expert, maintained that such monies ought not to have been spent by the Federal Government under any guise without the approval of the National Assembly.
He said: “Section 80 of the Constitution says that every revenue should be paid into the Consolidated Revenue Fund of the Federation,” adding that Section 80 (3) provides that: “No moneys shall be withdrawn from any public fund of the federation, other than the Consolidated Revenue Fund of the Federation, unless the issue of those moneys has been authorised by an Act of the National Assembly.”
“Section 80 (4) also states that “No moneys shall be withdrawn from the Consolidated Revenue Fund or any other public fund of the Federation, except in the manner prescribed by the National Assembly,” he added.
Thomas further stressed that in case the states require assistance of the Federal Government due to financial difficulties, the 1999 Constitution says the National Assembly must prescribe.
Similarly, he said Section 164(1) states that: “The Federation may make grants to a state to supplement the revenue of that state in such sum and subject to such terms and conditions as may be prescribed by the National Assembly.”
Similarly, Boyo (an economic analyst) faulted the President on the bailout, describing it as counterproductive.
Boyo noted that the President took the action without any insight into the structure of the bailout, due to the recklessness and profligacy of some governors in the past.
He pointed out that the action would create excess money in circulation through the CBN, which, he described as an additional burden.
“It has been the internal burden for over 30 years. It is the surplus cash in the system that makes low rate of inflation impossible to achieve because there is always too much money chasing a few goods.
“It is the existence of surplus naira also that makes the cost of fund to the real sector high. Because when you have excess liquidity, it makes it necessary for CBN to have a monetary policy rate that is high so as to debar people from accessing the surplus naira in the system,” Boyo stated.
In his comments, Afolabi, a banker, frowned at the bailout, saying some of the governors, after exhausting the funds, might shift their attention to the Excess Crude Account, ECA.
Afolabi recalled that the ECA was established by the Olusegun Obasanjo administration to save funds for the rainy day and have clear accountability that could enable every state and local government know their respective balance in the account.
Already, a member of the House of Representatives, representing Afikpo North and South Federal Constituency of Ebonyi State, Hon. Igariwey Iduma Enwo, has filed a suit before a Federal High Court, Abuja challenging the eligibility of the President, the Attorney-General of the Federation, Ministry of Finance, the Revenue Mobilisation, Allocation and Fiscal Commission, Accountant-General of the Federation and Auditor-General of the Federation for acting in breach of the constitution in the release of the bailout funds.
In the suit filed last week, Enwo asked the court to determine whether the constitution empowers the President to direct the third to sixth defendants to disburse public funds in the Federation Account without the prescription of the National Assembly.