No doubt many Nigerians would have heard of the Paris Club but onky a few will lnow exactly what this organisation is and its relevance to Nigeria.

The Paris Club is a group of officials from major creditor countries whose role is to find coordinated and sustainable solutions to the payment difficulties experienced by debtor countries. As debtor countries undertake reforms to stabilize and restore their macroeconomic and financial situation, Paris Club creditors provide an appropriate debt treatment. Paris Club creditors provide debt treatments to debtor countries in the form of rescheduling, which is debt relief by postponement or, in the case of concessional rescheduling, reduction in debt service obligations during a defined period (flow treatment) or as of a set date (stock treatment).

The great difficulties of some developing countries to break the cycle of debt led creditor countries of the Paris Club to adopt more ambitious policies such as debt reduction, debts rescheduling, debt repayments postponement or debt cancellation – depending on the class a debtor nation is classified in.

In December 1994, creditors decided to implement a new treatment called “Naples terms”, which can be implemented on a case by case basis. Thus, for the poorest and most indebted countries, the level of cancellation of eligible credit is increased to 50% or even 67% (as of September 1999, all treatments carry a 67% debt reduction). In addition, stock of treatments can be applied in each case for countries that have complied satisfactorily previous commitments. Up to 2008, 35 of 39 countries have reached the completion point of the Heavily Indebted Poor Countries HIPCs.

Though, a member of the Paris Club’s debtor nations, Nigeria, however, is not on the HIPC list and in 2014, Nigeria has paid off its multi- billion dollar Paris Club debt, becoming the first African nation to settle with its official lenders. But by the time Nigeria negotiated and effected the repayment of the Paris Club loan, the 36 states of the federation and the FCT had already had deductions towards the loan’s servicing fcharged by the federal goernment.

These deductions have since been paid back to the country by the Paris Club and the arrangement was to have the funds from the repayments released to state governments as part of the wider efforts to stimulate the economy and were specifically designed to support states in meeting salary and other obligations, thereby alleviating the challenges faced by workers.

“The releases were conditional upon a minimum of 50 percent being applied to the payment of workers’ salaries and pensions. The Federal Ministry of Finance is reviewing the impact of these releases on the level of arrears owed by State Governments.

Everything about the Paris Club Refund seems very shadowy.

So far, Nigeria’s Federal Ministry of Finance has shielded it’s citizens from detailed information about the money it had shared to states as refund of excess deductions from their statutory allocations. And the more questions Nigerians ask, the cloudier the details get. No state governor is even ready to disclose how the amounts credited to their states were arrived at. That raises a lot of suspicion about the money.
Nigerians want to know how the deductions were initially made. They want to know at what time the Paris Club realised that there were excess deductions. They want to know when their government realised that the deductions were in excess. They would like to know who supervised the deductions. They want to know how much exactly was over-drawn and how much, in all, including interest is due to Nigeria. Information in this regard is not handy; and there is suspicion that this is deliberate to keep prying eyes of the Nigerian away from the details.
The Debt Management Office put total debt to Paris club as at December 31, 2004 at $30,847,807,415. On the same document titled “Settlement of Paris Club Debt After Debt Relief”, the DMO listed $12,215,000,000 as ‘actual exit payment’ to the Paris Club. However, details gleaned from has $239m listed against Nigeria as “Paris Club’s claims as of 31 December 2015, excluding late interest”. By December 31, 2016 a total of $290m was listed against Nigeria. All are listed as ODA -Official Development Assistance. This is however not exhaustive as there are also other debts from the London Club of Creditors and other multilateral lenders.
But we are faced with a refund issue. Finance Minister, Kemi Adeosun, had disclosed that President Muhammadu Buhari, in November 2016, gave approval that a percentage of the total amount due the states as refunds, though not finally calculated, be released to the states to enable the payment of salaries. For this reason, some N522.7billion was shared in December 2016 among the states and FCT. Second tranche of the refund amounting to N243.7billion was also released to the states in June 2017.

Kemi Adeosun – Nigeria’s Finance Minister

Adeosun had clarified saying: “The Debt Management Office (DMO) initially requested for a period of 22 months to complete the reconciliation and facilitate disbursement. However, President Muhammadu Buhari, considering the plight of salary earners and pensioners and the need to stimulate the economy, directed that the exercise be completed within 12 months.
“In addition, Mr. President gave an express anticipatory approval for the release of up to 50% of the claim of each state, pending final reconciliation. That reconciliation is undertaken by the DMO, Office of the Accountant General of the Federation (OAGF) and the relevant State Governments”.

But there are still issues of how much was received by the federal government as total refund; and how much is each state entitled to in the final analysis. Mrs. Adeosun explains further: “To date, nine batches have been processed while some balances remain outstanding to the possible credit of a number of states. Given the foregoing, complete and final figures can only be released and published after each state and the Federal Government have reconciled and agreed on the sums due.”
She also disclosed that “at the National Economic Council meeting on Thursday March 16, 2017, President Muhammadu Buhari instructed the Minister of Finance and Central Bank Governor to commence the process of resolving the balance of the approved amount.”
Recall that when the issue of how the refunds were managed by the governors was first raised, and allegations of non-payment of salaries and pensions were made despite release of the refunds, some of the governors defended their actions by saying that part of the funds were also used in paying consultants engaged to work out what would accrue to the states.
Consultants? But the Finance minister had said “reconciliation is undertaken by the DMO, Office of the Accountant General of the Federation (OAGF) and the relevant State Governments”. State governments have auditors and accountants and finance commissioners. So, why consultants?
The Nigerian Governors Forum (NGF) rose in defence. In fact, after a meeting of the legal committee of the NGF at the Plateau State Governors Lodge in Abuja recently, it was disclosed that “with the decision of the legal committee of the NGF to push for the payment of all outstanding fees to all state consultants, the on-going legal battle between the governments on one hand and the consultants that pursued the repayment of the excess deductions made on Nigeria’s repayment of foreign loans, will end and the prospect of fresh ones averted.”
As it is, the governors have confirmed the engagement of consultants to work out what is due the states. Same time, DMO and Finance ministry are doing exactly the same. Finance ministry, DMO and even RMAFC should be in a position to compute whatever the refunds amount to. But consultants were engaged. None of the governors informed people of the states, who are actually owners of the money, how much the consultants are paid. All Nigerians have heard is that consultants were engaged. What specific assignment the consultants did is unknown to Nigerians. That aspect remains shadowy until Abia state was taken to court by a consultant.

The consultant, Mauritz Walton Nigeria Ltd, had approached a High Court of the Federal Capital Territory with an ex-parte application to freeze ‘Paris and London Debit Refund’ accounts of Abia, Cross River and Delta states with UBA Plc. In seeking the freeze order, the consultant disclosed that the states owe him as follows: Abia state -$11,325,000 and N1.72bn; Cross River state owes $8,050,000 and N1.2bn; while, Delta state government owes $27,274,135 and N3bn.
In the first tranche of refund made December 2016, Abia state received N10,631,324,520.96. In the second tranche in June 2017, it got N5,715,765,871.48. This amounted to a total of N16,347,090,392.44. Out of this, the consultant claims a debt of $11,325,500 (about N3,454,277,500.00) and another N1.72 billion amounting to a total of more than N5 billion.
Cross River state received N11,300,139,741.28 in the first tranche and N6,075,343,946.93 in the second tranche. This amounts to N17, 375, 483, 688.21. But the consultant claims $8,050,000 (about N2,455,250,000) and another N1.2 billion amounting to about N3.655 billion.
On its part, Delta state confirmed receipt of N14,500,000,000 from the first tranche and another N10,000,000,000.00 amounting to a total of N24.5 billion but allegedly owes the consultant the sum of $27,274,135 (about N8,318,611,175 and N3bn), which is about N11.3 billion. The outstanding to the credit of the consultant are without prejudice to what has already been paid to him by the states.
The above are based on claims made by the consultant against the states as made available to the high court of the FCT. No one would have known these details if there had not been a dispute that necessitated legal action. Based on the above, Gov. Okezie Ikpeazu was forced to explain that “a discussion on the Paris Club Refund to states in the country predates this administration. For those who don’t know, the Paris Club Refunds are monies legitimately belonging to states which were over deducted from the accounts of the states for the settlement of the debt owed by the country to the Paris Club of creditors under the scheme worked out by the Obasanjo administration.”
Speaking through his adviser on public communications, Onyebuchi Ememanka, the Abia governor further explained: “When the over deductions were sorted out, the Federal Government and the 36 states including the FCT agreed that the states should get these funds back and discussions on the modalities commenced. This was during the administration of former President Goodluck Jonathan. As a result of the complex nature of the transactions, the states then under the auspices of the Nigerian Governors Forum agreed to hire the services of financial advisors and consultants to assist in determining the exact amount due to each state under the refund scheme. Each state agreed with the consultants on the details of the contractual agreement and how much was to be paid as fees.
“Please note that all the 36 states then agreed to this. The refunds were never made by the last administration which left the entire scheme including the agreements with the consultants to lie in abeyance. It was the present government of President Buhari that now agreed to make the refunds and this naturally reactivated the interests of the consultants. Most of the Governors are new and were not part of the agreement with the consultants and they sought fresh details on the agreements. The reconciliation between the consultants and the states together with the Nigerian Governors Forum has been ongoing and some payments had been made to the consultants. This is public knowledge.”
From Ikpeazu’s explanation, there is no denying the fact that the Paris Club refund deal was cast in shadows. The governors, past and present, were obviously transactional, for personal ends, in the engagement of the consultants. The decision was not disclosed to actual owners of the money and, there is no arguing fact that the plot may not have been disclosed had Ikpeazu gone ahead to pay out about N5b as consultancy fee for no apparent service rendered to Abia state.
Article by Achilleus-Chud Uchegbu (published in The Will)

Additional material by

This site uses Akismet to reduce spam. Learn how your comment data is processed.