SGF charges banks to follow Fiscal Responsibility Act while lending to states

The Secretary to the Government of the Federation (SGF) Senator George Akume, has charged banks to follow the provisions of the Fiscal Responsibility Act in their lending to Governments in the Federation.

The SGF, represented by Dr David Eze, a staff of the Office of the Secretary to the Government of the Federation (OSGF), made the charge in an address delivered on his behalf at a Stakeholders Dialogue on Implementing Section 45 of the Fiscal Responsibility Act (FRA) hosted in Lagos on 7th October by the Fiscal Responsibility Commission (FRC).
The SGF who harped on the need for subnational governments to borrow through the right channels and for the right reasons, noted that governments across the world grow faster and better through good and strong institutions, rules and regulations, hence the implementation of the FRA 2007 is worthwhile.

Senator Akume insisted that a disciplined borrowing process helped to promote fiscal sustainability and macroeconomic stability.

He lauded FRC for organising the meeting at a time when the Nigerian economy is faced with key challenges.

“The dialogue is justified, as the government is working to get things right from the beginning to avoid mistakes that have dragged the nation into huge domestic and foreign debt.

“Accordingly, this administration is ensuring that the nation follows laid down rules and regulations, in order to ensure prudence, transparency and accountability in the management of public funds and also to depart from such practices that have left so much debt for successive government,” he said.

Earlier, in his address, Mr Victor Muruako, the Executive Chairman of the Fiscal Responsibility Commission (FRC), called on all Nigerian banks to adhere to the provisions of the Fiscal Responsibility Act (FRA) 2007, particularly its Section 45, in their lending practices to governments in the Federation and their agencies.

The Fiscal Responsibility Act 2007 (FRA), which is Nigeria’s foremost legal framework for the promotion, monitoring and enforcement of fiscal discipline, stipulates in Section 45(2), that lending by banks to governments or their agencies in contravention of the provisions of the Act shall be unlawful.

PART X of the act provides guidelines for borrowing by government agencies and public institutions, including the requirement for obtaining the necessary approvals and proof of compliance to ensure the sustainability of loans.

Recognizing the critical role that loans play in driving socio-economic development, the FRC brought banks together with regulators, and policy makers in the Stakeholder Dialogue to highlight the provisions of the FRA on responsible lending. Discussions focused on measures to enhance compliance to improve the nation’s debt management practices.

“We are committed to good corporate governance, fiscal stability and the pursuit of economic development to improve the lives of citizens while improving our nation’s viability.

“We, therefore, enjoin all stakeholders to support the bold macroeconomic reform initiatives of the administration of His Excellency Bola Ahmed Tinubu by ensuring more fiscal discipline in line with the provisions of the Fiscal Responsibility Act 2007 (FRA)”, he said.

The Chairman emphasized that the provisions of the FRA serve to keep the lender, borrower, regulator, evaluator, assessor, and indeed the beneficiary of public sector loans on the same page.