5.8tr debt: FG moves to limit states’ borrowing

The Fiscal Responsibility Commission (FRC) has revealed that it has issued a template and guideline on requirements before lending to state governments as part of efforts to check indiscriminate borrowing.

Head, Directorate of Legal, Investigation and Enforcement at the FRC, Barr. Charles Abana, made this known in Abuja at the Growth Initiative for Fiscal Transparency (GIFT) Media Parley with Civil Society Partners.

Daily Trust reports that sub-national governments and the Federal Capital Territory (FCT) domestic debt as at June 2023 is estimated at 5, 815, 684, 819, 242.35 according to figures on the website of the Debt Management Office (DMO).

The FRC said it was shocked to find out that most banks in the country lure state governments into securing loans that eventually add up to the nation’s total debt stock.

To check this, Abana disclosed that “at the commission, we have decided to give them the template and we will go ahead to make sure that the Central Bank of Nigeria (CBN) issues a proper guideline to banks on how to go about getting all the necessary requirements and compliance fulfilled before lending to the states unlike the past when they just go to the minister and the Debt Management Office (DMO),”

He said, “If we don’t put some checks on them, and make it not-too-easy for them to borrow, I don’t think we will come out of this debt situation”.