N40B Bond Is Not To Raise Fresh Loans But To Renegotiate Existing Debt – Imoke

As criticisms continue to trail the approval by the Cross River State House of Assembly for the government to raise a N40b Bond, the governor has explained that the Bond is not to raise fresh loans but to renegotiate the existing debt and spread the repayment period over a reasonable time and free up the state from numerous debts accruing from 2002.

The State House of Assembly had last week approved a request by the governor to issue a N40B Bond but the decision has continued to attract fierce criticisms from a cross section of stakeholders across the state.

But in a statement from the Chief Press Secretary to the governor, Mr. Christian Ita, Imoke said: “The Bond issued by the state government is an application to recapitalize subsisting debts in the state. It is not a bond to raise fresh loans but to renegotiate the existing debt and spread the repayment period over a reasonable time and free up the state from numerous debts accruing from 2002 when the first bond was issued by the state government in support of the Tinapa project.

“The first Bond ever issued by the state government was in 2002 when the first Bond Law was passed to enable the state government to borrow funds to finance the Tinapa project. Since 2002, the state borrowing bore a lot of interest which has accrued to the state federation account thereby limiting the State capacity to raise funds to bridge the funding gap in the state annual budget.

“The current Bond of N40bn is an accumulated compilation of past debts arising from the 2002 Bond and other subsequent state borrowing which is now being recapitalized and renegotiated with lower interest rates and longer repayment period.

“The government has presented the request for the recapitalization of the debt by bond following the procedure below:

1 The request was first presented to the state executive council and was approved.

2 The approval was sent to the State House of Assembly for a resolution to support the Bond.

3 The request to the house of assembly was backed up by law to amend the state Bond Law and Debt Management Law.

“The state finances have been in danger due to the fact that the 2002 Bond was issued without the required debt management framework and the 2002 Bond was limited to N4.5B while the borrowing there from exceeded that amount by 2005 without amending the law and providing a debt management strategy for the debts. The current request has put in place robust Bond Law and Debt Management Law with a regulatory framework to renegotiate the debts.”