The Nigerian government has been warned by all 36 states not to tamper with funds due to them and the country’s 774 local government areas on the pretext of repaying $418 million in debt related to repayment of London/Paris Club loans.
The states said they were not party to any action in connection with the London/Paris Club reimbursement and therefore were not liable to any person or entity in any judgment debt asserted by the federal government. .
The Federation Attorney General’s Corps, through which the states spoke, warned that if the federal government made such an inference, it would be acting illegally and in defiance of their appeal challenging the judgment.
The states gave the warning in a letter dated April 4, 2022 in response to a letter dated November 11, 2021 from the Minister of Finance, Budget and National Planning, announcing the start of the deduction for the liquidation of alleged court debts.
The Federation Attorney General’s Corps, through its Acting President, Mr. Moyosore Onigbanjo, SAN, of Lagos; The Acting Secretary, Dr. Abdulkarim Kana of Nasarawa and the Attorneys General of Abia, Benue, Rivers, Taraba and Zamfara, for and on behalf of all State Attorneys General, in the letter said: “Their Excellencies have drew our attention to your letter referenced above, which the various States of the Federation received towards the end of March 2022.
Please note that the Federation States were not party to any contract or lawsuit regarding the reimbursement of the London/Paris Club, which gave rise to the said judgment debts.
Therefore, the 36 states of the federation are not liable to any person or entity for any judicial debt. The letter warned that the deduction of stipends due to the States from the Federation account to liquidate judgment debts relating to the repayment of the London/Paris Club loan is subject to an appeal filed in the Court of Appeal. He added that the legal representatives of the body had published a public warning in national newspapers informing the public of the pending appeal, which also advised the parties involved “to refrain from dealing with the subject matter of the appeal. the latter, pending the hearing and decision on the appeal and the application”. for injunction pending appeal.
“The law requires you to refrain from taking any action whatsoever that may interfere with the security [subject matter] of the lawsuit, which is now the subject of an appeal,” he concluded.
The states continue their policy of maximum pressure on Aso Rock to comply with its position on tax probity. Some of Nigeria’s subnational units challenge the powers of the federal government through the Federal Inland Revenue Service to collect value added taxes; all are involved in another lawsuit which accuses Abuja of failing to pay out the funds generated from stamp duty and the third is this fight for Paris as well as reimbursements from the London Club.
Federation Attorney General Abubakar Malami has posed as a nasty pantomime with state governors and their attorneys general on an issue where conciliation and constructive engagement could pay dividends. As a result, Nigeria is rapidly heading towards an inflection point in fiscal federalism.
While the legal back-and-forth unfolds, a political solution might be possible and even prove sustainable given this administration’s penchant for disregarding court rulings when it serves its interests.
The current state of affairs, however, is that the federal government is determined to carry on with business as usual while the deteriorating state budget situation means that they will continue to find loopholes and overshooting points. part of Aso Rock to challenge and earn more revenue.
To paraphrase Napoleon, Nigerian states will fight more for their economic interests than for their political rights.
The good news is that struggles for said economic interests often lead to the realization and codification of political rights. It is important that subnational units remain committed to exploring legal means to address key issues of this nature, in order to obtain a clear legal position and integrate them into the political-institutional framework of the country.
As the country’s financial situation becomes more precarious, we will see more of these types of activities, and it will have only one impact – strengthening democracy in Nigeria.
According to 9News Nigeria findings, Nigeria’s first loan from the Paris Club of creditor nations was a US$13.1 million loan taken out from the Italian government in 1964 for the construction of the Niger Dam. From that time until the end of the decade, Nigeria’s borrowing from foreign lenders was generally insignificant.
The project was executed and the loan was among the foreign loans relieved in Nigeria under the democratic rule of Obasanjo.
In 2006, Nigeria became the first African country to settle its public debt under a program designed to help the world’s poorest and most indebted states. The country under former President Olusegun Obasanjo repaid $18 billion to obtain the cancellation of the balance of its nearly $30 billion debts to foreign creditors’ clubs in London and Paris.
But in recent years, Nigeria has continued to rely heavily on foreign loans in hopes of investing in infrastructure and national development. However, these funds borrowed from foreign countries, especially China, have not been used as they should be due to devastating corruption.
In December 2020, Nigeria’s external borrowings amounted to $28.57 billion, while in March 2021, using the N381 exchange rate, President Muhammadu Buhari had borrowed 17.06 trillion naira, aggregating exterior and interior borrowings.
This means that since 2015, Buhari’s government has borrowed an average of 2.83 trillion naira per year.