Senate to regulate state borrowing from foreign agencies

Channels Television  
Updated July 12, 2012

Senate of the Federal Republic of Nigeria has recommended that the legislature should consider appropriate laws to limit the total exposure of states to external and domestic borrowing to not more than 20 percent of their allocations from the Federation Account. 

The senate reached this decision after considering a report of its committee which investigated the problem of bankruptcy in states.

Chairman of the committee, Senator Barnabas Gemade said records available from the Debt Management Office, showed that as at December 2011, the total external debt stock of all states stood at 2.165billion dollars.

“Presenting the report, the chairman of the committee, Senator Barnabas Gemade (PDP, Benue), said: “There are indications that there is looming danger of bankruptcy in states. There is a high rate of corruption and corrupt practices through misappropriation and misapplication of public funds and abuse of immunity clause by some state governors. Much of the revenue accruing to the states and their local governments ends up being misappropriated”.

The senate further recommended that state governors should reduce the cost of governance by cutting down on recurrent expenditure.

Lawmakers blamed state governors for the looming danger of bankruptcy in many states.