The Federal Government has held talks with Nigerian banks on ways of plugging revenue leakages in the system and ensuring that the nation is not plunged into indebtedness by arbitrary lending to sub-nationals.
The talks focused on ensuring that all revenues due government are remitted and that going forward, any lending to subnational entities must pass through the ministry of finance for approval.
Government has also extracted a strong commitment from banks that going forward, the usual practice of banks colluding with the ministries, departments and agencies of the Federal Government to withhold revenues collected on behalf of the government would be stopped forthwith.
These were major outcomes of a meeting held between Ngozi Okonjo-Iweala, the co-ordinating Minister for the Economy and Minister of Finance, and the bank chiefs on Wednesday in Lagos.
MDAs have severally been accused of colluding with Deposit Money Banks to withhold revenues belonging to government, rather than remitting these monies into the Consolidated Revenue Fund, in serious breach of financial regulations.
The finance ministry said sometime last year, that as much as N58 billion of such Federal Government funds were trapped in the banks – as it threatened to shut down the accounts of the MDAs found culpable of this breach.
The ministry also said at the time, that despite warnings by government to discourage the practice, the MDAs, through their lawyers, had engaged in all manner of legal subterfuge to frustrate the remittance of the revenues.
But following these fresh talks, banks have now agreed to quickly turn in all revenues belonging to the Federal Government but held in their coffers, in an urgent response to dwindling revenue, on account of falling oil prices.
“One of the critical issues we discussed was on the internally generated revenue of government entities, where the government entities are required to remit 25 percent of the gross revenues.
“But as you know, sometimes, we have encountered difficulties in getting this done and therefore, the banks have pledged to work fully with the Federal Government to ensure that they do not inadvertently support any agency in trying to avoid remitting the funds.
“So the banks have agreed to work with the Federal Government to ensure that they are helpful in this regard, rather than hurting the economy, and any agency that is habouring money has to remit it, not just asking Nigerians to tighten their belts,” the minister stated.
Okonjo-Iweala said she expects to see better compliance by agencies with remittance of the IGR, with the help of the banks, as she emphasised that the economic managers are not panicked by dwindling oil prices which had dropped below the 2014 budget benchmark.
“We are not panicked over falling oil prices. The team (economic managers) are a little bit calm because we think we can work out some sensible policies and that is what we are doing now,” the minister noted, adding “but we have to take cognisance of what is happening in the global economy and we discussed that too and that is why all of us have to be sensible,”
Another agreement reached at the crucial meeting was getting the banks to comply with the nation’s Debt Management law, which requires that any lending and borrowing to subnational entity must pass through the ministry of finance for approval.
“And this is all in a way to ensure that states remain sustainable in terms of their ability to service their debts,” the minister stated. And is something to support the economy, to support the country, the states and the local governments, and make sure that we are all doing things within sensible limits,” she added.
The third element of the discussions, the minister said was to plead with banks which had given facilities to oil marketers to allow them a little room for repayment while the government works out payment to them from its own end
Speaking on this aspect, Okonjo-Iweala stated, “We just reached an agreement that the banks who are owed money will give the marketers some sensible breathing room, some understanding until the government can also pay.
“And we agreed to work together with the banks that lent monies to oil marketers, so that we will all ensure that the economy continues to function, the marketeers continue to be able to meet the need to supply the economy with the necessary refined products, while the government works out a mechanism for being able to pay the marketers. This is so that they can also repay their loans and we agreed on some modalities to do this.”