President Buhari
In a bid to ensure prudent management of sub-national resources,
the President Muhammadu Buhari-led Federal Government has barred
Nigerian banks from giving loans to state governments.
According to Vanguard, the decision was taken in line with the
Fiscal Sustainability Plan, FSP, which has been agreed to by the Federal
Government’s economic team and state governors.
This new development comes as the Central Bank of Nigeria (CBN),
will today announce details of the much anticipated ‘flexible’ foreign
exchange rate policy.
It was gathered from Ministry of Finance sources that President
Muhammadu Buhari was disappointed at the manner some past and current
governors took loans from banks and misapplied such funds, while
mortgaging their states’ finances.
Currently, some states are left with too little to meet even their
recurrent obligations, after deductions are made from their monthly
federation account allocations. Gives condition for bond proceeds
release Rather than bank loans, the Federal Government asked states to
source funds from the capital market for their infrastructure
development.
It also insisted that funds sourced through bonds must not only be
on bankable, measurable projects but must also be released in tranches.
Vanguard gathered that the release of the proceeds of bond issuing will,
henceforth, be on the basis of satisfactory utilization of earlier
released proceeds.
The FSP aims to improve accountability and transparency; increase
public revenue; rationalise public expenditure; improve public financial
management; and sustainable debt management.
Specific action points of the reform include biometric capture of
all civil servants; establishment of an efficiency unit in each state,
implementation of continuous audit, improvement in internally generated
revenue, IGR, and measures to achieve sustainable debt management.
States that meet the above FSP conditions can access a new N50 billion facility to be guaranteed by the Federal Government.
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