More than 30 state governments received $138.5 million grant from the World Bank for meeting the requirements for debt-related Disbursements Link Indicators (DLIs).
The state governments received the performance-based grants in 2018 and 2019.
Dr. Isyaka Mohammed, who represented Mrs. Patience Oniha, Director-General of the Debt Management Office (DMO), made this known at a workshop for Finance Correspondents Association of Nigeria (FICAN) organised by the States Fiscal Transparency Accountability and Sustainability (SFTAS) in Abuja.
Mohammed stated that there are three debt-related DLIs, which the state governments met.
This include the DLI 7 that is expected to strengthen public debt management and fiscal responsibility framework for the state governments.
Others are the DLI8 designed to improve the clearance/reduction of stock of domestic expenditure arrears of the state governments and DLI9 meant to improve the debt sustainability of the various states.
The DMO, Mohammed said, utilised “a combination of tools and approaches to support the State Governments in achieving the minimum requirements for the DLIs it supports”.
The tools and approaches, he identified, are: “guidelines; template and tools; physical or virtual workshops; and just-in-time advisory”.
In 2018, the benefiting states, which he did not mention received $29.5 million grants for meeting the requirements of DLI7, $1 million for DLI8 and $24 million for scaling through DLI9.
In 2019 the states received a total of $84 million as performance based grants broken down as $51 million for DLI7, $7 million for DLI8 and $25.5 million for DLI9. Thus bringing the total grants extended to the state governments to $138.5 million.
The debt-related DLIs 7 is divided into two segments 7.1 and 7.2. For DLI7.1 in 2018, 10 states met the three criteria for the legal framework, while in 2019, 23 states met the three criteria. In 2020, Mohammed said: “Thirty-four states would have met the criteria.” But he refused to make further clarifications.
For DLI7.2, a total of 19 out of 24 eligible states submitted quarterly debt report within 2 months of the end of the quarter in 2018.
However in 2019, 31 out of 32 eligible states met the two months deadline and in 2020, ‘only 15 met the DLR 7.2 requirement because the criteria became more stringent due to the inclusion of Debt Sustainability Analysis”.
For DLI 8 in 2018, one out of 24 eligible states met the criteria for arrears clearance framework while in 2019, seven out of 32 eligible states met the same criteria.
In the case of DLR9 for improved debt sustainability, in 2018, “18 out of 24 states met the basic and stretch targets leading to the disbursement of USD 24 million” Dr Mohammad said.
In 2019, total of 19 out of 32 States met the basic and stretch targets leading to the disbursement of $25.5 million.
Despite the encouraging performance of the state governments, Dr. Isyaka Mohammed said there were still challenges to debt sustainability for the state governments
Dr. Mohammed said the DMO and even the World Bank and SFTAS were worried that “states may not implement important components of the law”.