Reps screen $15m Ebonyi State’s external borrowing plans

The House of Representatives’ Committee on Aids, Loans and Debt Management on Wednesday screened $15 million external borrowing initiated by Ebonyi State Government for execution of critical developmental project.

Adeyinka Ajayi, chairman, House Committee on Aids, Loans and Debt Management explained that the interactive session with States was premised on the Acting President Yemi Osinbajo’s letter dated 25th May, 2017, soliciting for separation of the states projects from the items listed in the earlier submitted 2016-2018 External Borrowing Rolling Plan.

Ajayi (APC-Osun) disclosed that all tiers of government must adhere strictly with the provisions of Debt Management Office (Establishment) Act, 2003; Fiscal Responsibility Act, 2007 which enjoined the President to lay before the National Assembly its national borrowing programme for approval pursuant to the powers conferred on the National Assembly under items 7 and 50 of Part 1 of the 2nd Schedule of the 1999 Constitution (as amended).

Speaking earlier, Governor David Umahi of Ebonyi State disclosed that the $15 million facility enlisted in the 2017 budget was for the construction of Abakaliki Ring Road, though without financial attachment, will be completed soon.

According to him, the loan is to be used in line with terms and conditions of the facility from African Development Bank (AfDB) and Islamic Development Bank (IsDB).

Umahi who was represented by Deputy Governor Eric Igwe, explained that the administration had in 2016 injected the sum of N2 billion and additional sum of N4 billion into rice production, while several road projects aimed at opening up the rural areas where farming produces are being produced will be constructed, hence the need for the facility.

He further noted that some investors including Lafarge, BUA, NigerCem have expressed interest in exploring large deposit of bitumen in the state, adding that plans are underway to introduce toll-gate on some of the roads being conceived.

Ajayi who presided over the interactive session argued that “financial institutions and development agencies are required by the above Statutes to request and obtain proof of compliance with the provisions of Part X of the Fiscal Responsibility Act before lending to any government in the Federation. The Act provides that failure to do so, shall be declared unlawful.”

According to him, to borrow funds, all tiers of government are mandates to: ‘specify the purpose for which the borrowing is intended which shall only be for king term capital expenditure and human capital development and such borrowing shall be on concessional terms with low interest rate and with a reasonably long amortization period.

All tiers of government are also expected to “present a cost benefit analysis detailing the economic and social benefit of the purpose for which the intended borrowing will be applied and provide satisfactory proof if the existence of prior authorization in the appropriation law for the purpose for which the borrowing is to be utiised.”

While clarifyjng the misgivings on the alleged borrowing spree, Ajayi noted that the Legislature is aware that borrowing is an essential and unavoidable tool in a nation’s public financial architecture and is required for rapid and sustainable development.

“However, our concern as an arm of government is that borrowing should only be resorted to where it will be useful to unlock potentials for job and wealth Creation for Nigerians, must be obtained under beneficial terms and conditions in accordance with the law and must be sustainable.

“A situation where anatiin borrows for consumption or recurrent expenditure at the detriment of long term infrastructure or institution building investments and where debt service figures begin to rise greatly, eating deep into the nation’s available resources in its budgetary allocation is unhealthy and therefore unacceptable.

“As sister institutions, this Committee, where it deems necessary and inappropriate circumstances, will liaise with our Co-Legislators at the State Houses of Assembly in order to realise the mandate of this committee before making appropriate recommendations on the borrowing requests and also to conduct necessary oversight after disbursement many have commenced,” the Osun lawmaker stressed.