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FG to cease facilitating loans for states, as Nigeria’s debt profile hits N3trn

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FG to cease facilitating loans for states, as Nigeria's debt profile hits N3trn

Any state government that fails to adopt a new strategy in its fiscal policy will no longer get support from the Federal Government, as the era of easy access to borrowing from either foreign or local window is set to be over.

This is coming on the heels of revelation that the total debts in the country stood at N3 trillion as at the end of the second quarter of 2017.

In a meeting between the Edo State Governor, Mr. Godwin Obaseki, and the new Director–General of the Debt Management Office (DMO), Patience Oniha, marking a courtesy visit by the Governor to her office in Abuja, on Thursday, the DMO boss disclosed that a number of states had defaulted in debt data reporting performance.

These include five states: Jigawa, Ogun, Akwa Ibom, Katsina and Rivers, which are non-compliant in their debt data reporting to the DMO, as at December 31, 2016.

She stated that Lagos and the oil-producing states are the largest debtors in the federation, while the Federal Government’s foreign debt profile alone had risen to $3.7 billion.

According to her, the decision for the government at the centre not to continue supporting states for more debt acquisition was taken because there was no longer huge allocation to states from the Federation Accounts Allocation Committee (FAAC) from where borrowed funds could be deducted, hence continuous exposure to new lines of borrowings may no longer be sustainable.

Read also: N30TRN REVENUE LOSS: Senate orders firms to file defence in one week

Oniha expressed regrets also that oil mineral resources have continued to be the dominant contributor to the Federation Account.

She advised that states should start planning of how to deploy new strategies to address the financing of their already bloated debt stocks as well as how to generate funds to execute their plans, aside from borrowings.

“We can’t collect money from FAAC, borrow, continue and wait until the next month. So at various levels, we need to be more strategic and more creative in the things that we do,” she told her guest.

She added that while the Federal Government had initiated several measures to increase non-oil revenue, control cost, some of the states had ,however, embarked on a number of initiatives, that were commendable.

According to the records from DMO , states’ domestic and foreign debt stock indicates that Lagos and some oil-bearing states such as Rivers, Bayelsa, Delta, Akwa Ibom, and the Federal Capital Territory are the heavy debtors in the domestic debt components.

Further breakdown shows some of the states’ debt stocks thus: Lagos (N311.755 billion); Delta, N242.231 billion; Akwa Ibom, 155.431 billion , Bayelsa, N140.177 billion and FCT, N152.804 billion.

The least owing states in the local debt component are: Anambra with N3.993 billion; Jigawa, N19.005 billion and Yobe, N13.581 billion.

 

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