Ogun State says it is unfit to seek for or secure loans at present
Ogun State Government, on Tuesday, denied the speculation that it proposed to borrow money and issue bonds worth N100 billion.
There were also speculations that the executive arm of the government had written to the state House of Assembly to seek approval for the loan.
But Kemi Adeosun, the state’s Commissioner for Finance, refuted the claims at a press briefing in Abeokuta. She said that the bond instrument is not the appropriate option for the state in its present circumstances.
The Finance Commissioner explained that the executive had only forwarded a bill seeking to set up a legal framework to be followed before a loan is secured.
“If the bill is eventually passed to law, it will serve as an instrument for financial discipline which will be binding on the present administration and the successive administrations,” she stated.
According to Ms. Adeosun, the bill will repeal “existing Ogun state bond law which is so weak and allows the government to just seek for bond loan anytime it desires.”
The Finance Commissioner explained that the amount of bonds that can be accessed by any government would be determined by the previous years’ revenue and its current debt profile.
“When these two factors are considered, we cannot say we are doing perfectly because our income is small and our debt is high.
“We are actually on a financial recovery process and what we are doing presently is to reduce the inherited loan significantly while improving on our revenue generation drive,” Ms. Adeosun said.
She held that Ogun state has reduced its debt from N87 billion to about N60 billion, adding that the state’s internally generated revenue has increased from N17.9 billion in 2010 to N25.2 billion in 2011.
“What we need now is not long term financial instrument like bond but medium term instruments like promissory notes and contractors financing.
“In all I can confidently say that the financial recovery process adopted by the present administration is on course,” Ms. Adeosun said.
She claimed that the present administration had only borrowed N15 billion since its tenure in May, 2011, adding that the fund is still intact.
Ms. Adeosun said that the Ogun government will deploy the funds in the financing of capital projects like construction of roads and model schools in the state.