The Senate has warned state governments against reckless borrowing, saying it would not accede to every request.
Senator Ehigie Uzamere, chairman, Senate Committee on Local and Foreign Loans who gave the warning at the continuation of the defence of a loan of $7.9 billion by the Federal and state governments, said states which were expecting blanket approval of requests for loans should forget it, because his committee would not grant their requests.
Uzamere, stated that approved loans must not be seen by benefiting states as free money that should end up in private pockets.
“It is sad the way we are going in this country,” he said, adding that states must take loans seriously.
He noted that the committee would monitor the use of the loans through oversight to ensure that they are not diverted.
Uzamere, urged the states that have not submitted their template for loans to do so because the Federal Government was awaiting approval of the loans.
He insisted that requests by states that fail to submit their template would not be considered.
Senator Gbenga Obadara, a member of the committee, also warned that there was no reason for any state to “over borrow.”
He said: “These loans, you are not the ones to repay it. This is how our nation became a debtor nation and we battled to free the nation from huge foreign debts.
“From what I see, the debt profile will continue to pile up. I don’t want my children to become slave of any nation because of loans. We know the consequences of these loans. You may mean well, but you must be careful how you borrow.
“Some states have asked for $50 million loan, others asked for more. You begin to wonder how much is the GDP to warrant the huge loans.”
Mr Bernard Okumagba, Delta State Commissioner for Finance, who defended his state’s request, noted that there was a huge funding gap in the state’s drive to successfully implement some projects.
Okumagba said the terms for the credit are maturity spanning 40 years, a grace period of 10 years, service charge of 0.7 per cent and commitment charge of 0.5 per cent.
He said the projects for which the loan are sought included youth empowerment and access to socio-economic services, public financial management reforms and project coordination and implementation support.