Senate warns states against $3bn loan plan

Posted by admin Legislature, Senate Monday, December 10th, 2012

The Senate Committee on Local and Foreign Debts has expressed concern over requests by state governments to secure foreign loans totalling over $3.059 bn.

Chairman of the committee, Senator Ehigie Uzamere, raised the alarm at a meeting with some of the affected states finance commmissioners in Abuja on Monday.

Uzamere warned state governments against obtaining loans that would mortgage the future of Nigerian children

The states are seeking the National Assembly’s approval for a $3.059bn loan, out of the $7.9bn foreign loan being sought by governments from international credit agencies.

Some of the states are, Ondo which is seeking a loan of $77.9 m; Enugu, $ 148m; Niger, $ 124m; and Anambra, $75m.

Giving the breakdown of the loan proposals, Ondo State Commissioner for Finance, Mr. Yele Ogundipe, said $50m was for health programmes and another $27.9m for youth employment; his Enugu State counterpart, Mr. Ralph Nnaji, submitted a request of $50m loan for watershed management project, $40m for youth empowerment, and $40m for energy project.

In the same vein, Niger State is asking for $78m for what it tags rural mobility. Irrigation, it says will take $14m, while FADAMA will take $32m.

Anambra State is asking for $75m for erosion and flood control.

Lagos State governor, Babatunde Fashola, had earlier appealed to a Committee of the House of Representatives to implore the Minister of Finance to include the second tranche of his $600m loan plan in the 2013 borrowing plan.

Uzamere however warned states against incurring debts that could mortgage the future of their children.

He said the Senate was worried that most of the affected states were not seeking the loans for projects and programmes that would have direct impact on the lives of their people.

The Committee chairman said, “It is very sad the way we are going in this country, especially in terms of borrowing. Our children yet unborn must not suffer from what they don’t know anything about.

“When we approve these loans, our committee will visit the states to see what the governors are doing with the loans.”

A member of the committee, Senator Gbenga Obadara, also charged the states to align their borrowing plans with the needs of the masses.

He said, “There is no reason for any state to over-borrow. The governors must think of people that will pay the debt in 10 years time. We, as lawmakers, find it difficult to see the states in debt trap. We have states seeking $100million. Their debt will continue to pile up.

“One per cent of loan interest today will become very huge in 10 years’ time. We should shun reckless borrowing as much as possible. Our committee therefore advises state governors to cut their cloths according to their sizes.”

Fashola, at a meeting with the House Committee on Loans/Aids/Debt Management, had said that he got in touch with the Minister of Finance and appealed for the second tranche to be included in the 2013 borrowing plan.

The governor complained to the committee that if the money was not made available, it would affect the plans of his administration to provide better infrastructure for the people of Lagos.

Representatives of the federal and state governments had appeared before the Senate Committee on Local and Foreign Debts on Thursday, December 6, 2012, to defend their proposals for external borrowing under the medium term expenditure framework for 2012 to 2014.

The breakdown of the borrowing plan shows states’ total borrowing proposal of $3.059bn, while the Federal Government has $4.846bn.

Minister of State for Finance, Dr. Yerima Ngama, who led the team of commissioners for finance of states before the committee, had explained that the loans were tied to specific projects to ensure that they filled a developmental gap in the economy and for timely repayments.

Via Guardianwp_posts