A Non-Governmental Organization, Policy Alert, has cautioned Akwa Ibom government against taking out loans for projects that are not self-liquidating.
Significantly, Policy Alert, working to promote social, economic and ecological justice in the Niger Delta, is greatly concerned over what it termed “the unsustainable debt profile of the state.”
A few months ago, BudgetIT of Debt Management Office published that the debt profile of the state stands at N245 billion.
Speaking during the 2020 edition of its annual Open Budget Forum (OBF), Iniobong Usen, the organisation’s Programme Lead on Extractives and Open Data, said: “The state acquired fresh loans to the tune of N48 billion in 2019 as against N6.7 billion in loans acquired in 2018, a mind-boggling 623% year-on-year increase.”
Usen lamented “Quite significantly, 2019 was an election year, which makes the sharp rise rather suspicious. In 2020, the state plans to acquire another N38.1 billion 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.”
According to him, “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.”
“We want to caution the state government against taking out loans for projects that are not self-liquidating. The group, however, lauded Akwa Ibom House of Assembly for passing the Fiscal Responsibility Bill, calling on the state governor to give assent to the Bill.
“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 COVID-19 on the state’s economy.” Usen said.
He thanked 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.”
The six-year-old year Akwa Ibom State Open Budget Forum (OBF) is an annual event organised by Policy Alert for government representatives, civil society organisations, community representatives, media practitioners, representatives of labour and professional groups and other stakeholders to meet and deliberate on the state budget in an open manner, to ensuring that the budget process meets the required standards of transparency, responsiveness, accountability and citizens’ engagement.