The House of Reps has given guidelines on external borrowing to states.
Chairman of the House of Representatives Committee on Aids, Loans and Debt Management, Adeyinka Ajayi stated this at an interactive session organized to consider the 2016-2018 external borrowing plan on Wednesday, July 26, 2017.
Ajayi debunked rumours that the legislative arm of government was against external borrowing by states.
"Nothing could be further from the truth, parliament is indeed aware that borrowing is an essential, if not unavoidable tool in a nations public finance architecture and is required for rapid and sustainable development," Ajayi said.
"The situation where a nation borrows for consumption or recurrent expenditure at the detriment of long term infrastructural or institution building investments and where debt services figures begin to rise greatly, eating deep into the nations available resources in its budgetary allocation is unhealthy and therefore unacceptable," he added.
The interaction was sequel to a request from Acting President, Yemi Osinbajo on the May 25, 2017 asking the House to separate states projects from items listed in the earlier submitted 2016-2018 external borrowing requests plan, with a view to giving the states requests accelerated consideration.
Ajayi reminded those at the session that the request of the Acting President was in compliance with the provisions of the Debt Management Office (Establishment) Act, 2003 and the Fiscal Responsibility Act 2007 which both enjoins the President to lay before the National Assembly its external borrowing plan for approval pursuant to the powers conferred on the national assembly under items 7 and 50 of part 1 of the second schedule of the of the constitution 1999 as amended.
The committee began its scrutiny with the Ebonyi state which intends to obtain from the African Development Bank (AfDB) and the Islamic Bank a loan facility of 150 million dollars which will be taken in tranches of 80 and 70 million dollars from the two institutions and is to be spent on developing road infrastructure in Ebonyi state.
The Deputy Governor, Kelechi Igwe said Ebonyi state has put in place a very robust structure to ensure the repayment of the loan facility.
This he said was in the proper tolling of roads which the state would vigorously pursue to ensure that the facility it is seeking is repaid.
Igwe expressed optimism that the roads being built in Ebonyi state would have a life span of 30 to 50 years.
Igwe told the committee that Ebonyi, as an agrarian state, has made an example in agriculture with the production of rice which stands the state out in Nigeria.
"In Ebonyi state, the sum of two billion naira was injected by the state into rice production and within nine months, it realized four billion which has been reinvested into the state’s economy," the deputy governor said.
Present at the session were other members of the committee, the chairman of the Senate committee on Sports, Obinna Ogba, representatives of the Debt Management Office, Abubakar Sani and Maimuna Ibrahim, the country director of the French Development Agency, Olivier Delefosse, among others. 3