Policy Alert, a Civil Society Organisation promoting economic and ecological justice in the Niger Delta, has condemned the plan by the Delta State government to obtain a fresh loan of N120bn despite its heavy domestic debt burden and just a few weeks before the 2023 elections.
The Delta State House of Assembly had on Thursday, January 26, 2023 approved two separate loan requests of N100bn and N20bn respectively for the State Government.
In a statement released this morning and signed by its Programme Officer, Governance Reforms and Anti-Corruption, Faith Paulinus, Policy Alert observed that when added to the current debt stock of the State, the fresh loan would drive Delta State closer to an unsustainable debt profile.
The statement read, “With a domestic debt burden of N272.61bn as of September 2022 as published by the Debt Management Office, Delta State is the most indebted State in the Niger Delta and the second most indebted State in Nigeria, after Lagos.
“With the latest approval of N120bn by the State Assembly, the Delta State’s domestic debt profile will spike to an unprecedented level of at least N392.61bn, amounting to over N69,000 per capita, excluding outstanding payment certificates and other contingent liabilities.”
The organisation noted that “the proposed facilities would be the latest in a string of spurious loans that have been acquired by the state government in recent times. It would be recalled that in April 2022, the state Assembly had approved a N150bn loan for the state government. It is even worse that the state government has been using future payments of 13 percent derivation arrears from the federal government to back these facilities.
“From an inter-generational perspective, this is like eating your own lunch and also eating the share of your children. The government’s argument that these are not loans but discounting facilities is not just lame but insensitive to the citizenry who will be responsible for paying back these debts. We are even more concerned that these loans are coming on the eve of the 2023 general elections with the state governor being the Vice-Presidential Candidate of a political party and the Speaker of the Assembly being a governorship candidate. This has fueled speculations that the resources could be used for politicking rather than for capital projects as required by law.”
The organisation noted that these recent borrowings are in contravention of the federal and state fiscal responsibility laws which mandate state governments to present to the public through the legislature a clear cost-benefit analysis for proposed loans and to clearly demonstrate that the loan will not push the government into an unsustainable debt situation and will be spent on self-liquidating capital projects.
Policy Alert calls on the Delta State House of Assembly to reverse this latest loan approval in the interest of the State and future generations. The organisation asked the Fiscal Responsibility Commission to activate its powers provided by Section 2(1b) of the Fiscal Responsibility Act (2007), to cause an investigation into whether any person has violated any provision of the Act in the loan approval.