Banks, local contractors groan under govt’s N2tn debt

The Senate, on Tuesday, said local contractors’ debt in the country is currently estimated to be N2 trillion.

The debts, the Senate noted, are those owed contractors operating in the oil and gas sector, as well as others in the pharmaceutical industry.

In a motion, titled ‘the urgent need for the Federal Government to redeem local contractors debts’ and sponsored by Senator Oluremi Tinubu, the Senate expressed worry that the inability of the Federal Government to repay these debts was negatively affecting the economy.

Senator Tinubu said any further delay in servicing these debts may adversely affect business organizations operating in the country. She said owing to the fact that many businesses are indebted to banks, further delay may subsequently affect financial organizations, especially banks.

Senator Tinubu explained: “The inability to repay subsisting bank loans may affect the purchasing power of petroleum marketers, thus creating scarcity of petroleum products.

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“I am further concerned about the alleged failure to pay debts owed to pharmaceutical companies and the impact this may have on the health sector.

“The data released by the Debt Management Office put Nigeria’s domestic debt as at June 30, 2016 at over 10 trillion Naira. Local contractors debt is estimated to amount to an additional N2 trillion.

“Settling these local debts will ensure that affected businesses stay afloat through increase in the circulation of money in order to bring the current economic recession to an end.

“I know that this Senate is determined to ensure that Nigeria’s economy recovers from this recession and is nursed back to prosperity in the shortest possible time.”

Senator Jibrin Barau in his contribution, said if contractors are paid, it will enable them repay their loans to banks, which in turn, will be able to give more loans to business owners.

Senator Magnus Abe, warned that a repeat of what happened in the past, when banks owed huge debts went under, must be avoided. He said families who are affected by these huge debts are unable to meet their daily obligations.

Senator Shehu Sani on his part, said there is an urgent need to repay local contractors. He said as chairman of the committee on Local and Foreign Debts, he had been inundated with calls from local contractors.

Meanwhile, President of the Senate, Saraki, has ordered chairmen of all the standing committees to submit the final copies of budgets of agencies under their purview to the Senate committee chairman on Appropriation, Senator Danjuma Goje.

Saraki who made the announcement during plenary, said the final copies of the reports must be submitted on or before Friday, 3rd of March, 2017.

Saraki noted: “I am using this medium to call on chairmen of all the standing committees to submit final copies of their reports to the chairman of the Senate committee on Appropriation, Senator Danjuma Goje.

“Chairmen must follow this instruction so that we can immediately conclude work on the budget and pass it in record time.”

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