The Fiscal Responsibility Act is a law of the National Assembly.
Section 44 and 45 of the Act which deals with conditions of borrowing and verification of compliance with limits provides as follows:
Section 44 – (1) Any Government in the Federation or its agencies and corporations desirous of borrowing shall specify the purpose for which the borrowing is intended and present a cost benefit analysis detailing economic and social benefits of the purpose to which the intended borrowing is to be applied.
(2) Without prejudice to sub-Section (1) of this Section, each borrowing shall comply with the following conditions:
(a) The existence of prior authorisation in the appropriation or other acts or law for the purpose for which the borrowing is to be authorised; and
(b) The proceeds of such borrowing shall solely be applied towards long term capital expenditure.
(3) Nothing in this section shall be construed to authorise borrowing in excess of the limit set out in section 44 of this Act.
(4) The Commission shall verify on a quarterly basis, compliance with the limits and conditions for borrowing by each Government in the Federation.
(5) Without prejudice to the specific responsibilities of the National Assembly and Central Bank of Nigeria, the Debt Management Office shall maintain comprehensive, reliable and current electronic data base of internal and external public debt, guaranteeing public access to the information.
Section 45 – (1) All banks and financial institutions shall request and obtain proof of compliance with the provisions of this Part before lending to any government in the Federation.
(2) Lending by banks and financial institutions in contravention of this Part shall be unlawful.
Governor Ayade on the 5th of July 2019, wrote a letter to the Speaker of the Cross River state House of Assembly, Hon. Eteng Jones, seeking authorization to borrow N5billion from First Bank of Nigeria Plc, at 18 percent interest rate, to enable him pay pension arrears and take care of “unforseen obligations of government.”
The letter was read in plenary on 9th of July and the House granted the approval same day without delay, in record speed.
But I have ten questions that are bothering my mind.
1. The Fiscal Responsibility Act expressly requires the governor to explain the purpose for any borrowing, give details of economic and social benefits with cost analysis. Apart from pensions, what exactly does Governor Ayade mean by “unforseen obligations?
2. One of the lawmakers, Hon. Elvert Ekom during plenary, contemplated that ‘unforseen obligations’ could be the salaries for June 2019 which the governor hasn’t been able to pay. Is that true?
3. What and where is the break down of the economic and social benefits and cost analysis of ‘pension arrears and salaries’ as required by law to have persuaded the lawmakers to grant the approval?
4. The law provides that there must be existence of prior authorisation in the appropriation or other acts or law for the purpose for which the borrowing is to be authorised. We have a copy of the 2019 Cross River state appropriation law, “Budget of Qabalistic Densification.” This particular borrowing is not authorized in the budget. Is there any other prior act of the state assembly or law that authorized this borrowing?
5. The law commands clearly that proceeds of such borrowing shall solely be applied towards long term capital expenditure. Salaries and pensions are recurrent expenditures. Why did the House of Assembly overlook that provision?
6. The law bars any government from borrowing in excess of the ratio set in section 44, for their earnings and expenditure. Cross River State has borrowed in excess of its revenue by 436.49 per cent. Despite this, the governor has continued to draw over drafts from banks since he took over, yet he was still granted approval to borrow another N5billion?
7. The law mandates all banks and financial institutions to request and obtain proof of compliance with the provisions of this Part before lending to any government. Has First Bank who want to lend Ayade the N5billion requested for and obtained all these requirements as provided for in the law?
8. Are the banks and financial institutions who are doing business with Governor Ayade aware that the law says lending by banks and financial institutions in contravention of this Part shall be unlawful?
9. Are the allegations that the governor has promised to reward the lawmakers with kick backs from the proceeds of the borrowing true?
10. Or is Speaker Eteng Jones Williams telling Cross Riverians that they have just left the frying pan and entered fire, with his 9th Assembly?
These and more are the matters tormenting the carapace of my mind this morning as we endure the remaining 1417days.
Citizen Agba Jalingo.
Mr. Agba Jalingo is the Publisher and Editor-in-Chief of CrossRiverWatch, writes from Lagos.
NOTE: Opinions expressed in this article are strictly attributable to the author, Agba Jalingo, and do not represent the opinion of CrossRiverWatch or any other organization the author works for/with.
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