N5b Subsidy Palliative Fund Loan, Grants to States – FG

The federal government has said its N5 billion oil subsidy palliative fund for states is a mixture of grant and loan.

The government explained this on Friday following the release of N2 billion to state governments.

The Minister of Finance and Economic Coordinating Minister, Mr Wale Edun told reporters at the first press conference in Abuja that the federal government decided to release N2 billion only as the first tranche to prevent a rise in inflation and maintain macroeconomic stability if N5 billion were to be released.

He stressed that the government decided to postpone the release of N5 billion as he was aware of the consequences of that decision.

READ ALSO: FG Releases N2b Out of N5b Subsidy Palliative Fund

The Finance and Coordinating Minister said the N5 billion bailout to the states was “a blend of grant to and borrowing by the state governments.

“The President is going to deliver a better life to Nigerians by encouraging investment that increases productivity that grows the economy and thereby creating jobs and reducing poverty.”

According to the Minister, the President was interested in increasing revenues so that the new government will have enough funding to carry out its obligations and to stabilise the economy as a whole.

He said:

“On one hand, it is by increasing tax revenue not by increasing taxes necessarily but by bringing greater efficiency; the aim is to bring greater efficiency to cut leakages and to maximize the legitimate revenue that should come to the government.

“Likewise in order to gain and build public trust, there will be emphasis on efficiency in government expenditures and similarly effective debt management so that borrowing has the link to it, the return on investment, we will borrow and you will see the cash flow that will repay that borrowing.”