Teddy Nwanunobi, Abuja
Chairman, Senate Committee on Foreign and Domestic Debt, Senator Shehu Sani, has described the recent moves by Northern governors to obtain loan from the Saudi-based Islamic Development Bank as a direct conflict with the laws of the country.
Sani, who also doubles as the Vice Chairman, Senate Committee on Foreign Affairs, argued that only the Federal Government has the exclusive right to do so.
“The action of the governors runs contrary to the relevant provisions of the Act that clearly and unambiguously rests the exclusive right to borrow externally on the Federal Government.
“The Debt Management Office (DMO) Act 2003, Section 21 and External Borrowing Guidelines, 2008-2012, paragraph 2.1 clearly states that: ‘Any Government or it’s agencies can only obtain external loan through the Federal Government and such loans must be supported by Federal Government Guarantee’.
“The Act is explicitly clear that no state, local government or federal agency shall, on its own, borrow externally.
“Governors of the Northern states cannot just jet out to Saudi Arabia to solicit or collect loans without following the due process of the Law, and the law further states that: ‘State governments and their agencies wishing to obtain external loans shall obtain Federal Government approval in principle from the Federal Ministry of Finance. This is the provisions of Paragraph 2:2(II) of the External Borrowing Guidelines
“In addition to the above, Paragraph 2.2(v) of the same guideline succinctly declares that: ‘All external borrowing proposals of the governments and their agencies for the next fiscal year must be submitted not later than 90 days preceding the year to the Minister of Finance for incorporation into the public sector external borrowing program for the coming year’.
“Paragraph 2:2(vii) demands that: borrowing proposal must be submitted to the Federal Ministry of Finance and the Debt Management Office for consideration,” Sani said in an email statement.
The UNION reports that the proposal includes: the purpose for which the borrowing is intended and it’s link to the developmental agenda of the Government; cost benefit analysis showing the economic and social benefit to which the intended borrowing is to be applied; and cash flow statements of the MDAs to ascertain their viability and sustainability.
To borrow from external sources, the DMO have to ascertain, if the borrower have not over borrowed and the borrowing proposal must be incorporated into the annual budget for federal executive council approval.
“No state or group of states can borrow from external source without approval from the National Assembly and clearance from the Federal Ministry of Justice.
“Whoever led the Northern governors to Saudi for loan is ignorant of the relevant provisions of the law, or he has chosen to circumvent the law.
“I wish to advice the Northern governors to go back and read the relevant Acts, and I call on the Islamic Development Bank not to release any of their funds until the due process is followed, or else they will be on their own,” he added.