A civil Society Organisation in Akwa Ibom State, Policy Alert on Thursday raised the alarm over the alleged reckless borrowing by the State government which according to it has caused a spike in the debt profile of the state.
The Programme lead on Extractive and open data of Policy Alert, Iniobong Usen, during the 2020 edition of the annual Open Budget Forum (OBF) organised by Policy Alert said the State has been plunged into unsustainable debt profile because the loans are not self-liquidating.
He expressed worry that after the N48 billion loan of 2019, the State government is making plans to acquire a fresh loan of N38.1 billion in 2020.
He further expressed worry that all the loans were gotten from commercial banks with high-interest rates which would eventually translate to huge debt burden to successive governments.
His words, “The state acquired fresh loans to the tune of N48 billion in 2019 as against N6.7billion in loans acquired in 2018, a mind-boggling 623% year-on-year increase. Quite significantly, 2019 was an election year, which makes the sharp rise rather suspicious. In 2020, the state plans to acquire another N38.1billion in loans.
“It is particularly disturbing that a significant part of this new debt will be spent on the Coconut Refinery Project and the 21 Storey Building Project which both received a loan injection of N10 billion last year.
“In 2019 the state spent N13.9 billion on loan repayments alone. When we consider that these are commercial bank loans with high-interest rates, the situation becomes all the more worrisome, as it translates to a huge debt burden for future generations.”
The organization cautioned the state government against taking out loans for projects that are not self-liquidating and lauded the state House of Assembly for passing the Fiscal Responsibility Bill and called on the state governor to give assent to the Bill.
He said, “When this bill finally becomes law in the state, it would become an offence for the executive to acquire loans without a proper cost-benefit analysis, as is currently the case in Akwa Ibom State. We have to stem this seeming appetite for debt accumulation, especially at a time like now when investments should be tailored towards addressing the impacts of Covid19 on the state’s economy.”
The organization also commended the State Executive Council for approving the establishment of an Audit Service Commission for the state, noting that “an independent audit cadre for the state was long overdue as it would entrench principles of transparency, accountability, value for money and integrity in public financial management in the state, and eventually lead to improved service delivery.
