Is it true that Edo state external debts today stands at - TopicsExpress



          

Is it true that Edo state external debts today stands at $47million while the domestic debt is about N12-billion? Well with an estimated N20-billion appropriated out of a total budget of N160-billion to service debts in 2014, little wonder that Chief Dan Orbih, the Edo PDP chairman recently asked the state government for the true position of the states indebtedness. He said the government should, as a matter of urgency declare the debt profile of the state so that the citizens will know what they are in for. However, besides the opposition, the media has had it rough getting this true picture from relevant government agencies such as the Governors Office, Ministry of Finance, budget and Economic Planning, the Economic Management team and the Budget office. Suffice to say that unconfirmed records from the Edo budget office show that in November 2008 when Governor Adams Oshiomhole took over the reigns of government from Senator Oserheimen Osunbor, he met a debt profile of 4.4 Billion Naira. Not satisfied with what he said what high against the backdrop of perceived revenues acruing to the state, he set up an assets and liabilities panel headed by Mr Useni Elamah, an accountant, with a mandate to dig up the true facts. It is six years since Elamah, who recently ended up as the chief tax officer of the state, submitted a report of his panels findings to Oshiomhole. A white paper is still being awaited by Edo people. There are indications, however, that barely one year in office, Oshiomhole tripled the N4.4billion debt he inherited to N18.8 Billion by December of 2009. By January 2010 he has acquired a loan of N5billion from Skye Bank, N5billion from United Bank of Africa (UBA), N2.2billion from Equatorial Trust Bank (ETB) and N2.9billion from First Bank of Nigeria. By September of that year Edo was owing a record N25-billion. It is also on record that the government has been financing the states annual budget with loans. Elias Mbam is Chairman of the Revenue Mobilization Allocation and Fiscal Commission (RMAFC), Elias Mbam. He once told the Senate joint committee on National Planning, Finance, Appropriation and States and Local Government investigating looming bankruptcy in many states and the need for fiscal evaluation in Nigeria that the external debt of many of them was awesome. He said, “Records available to the commission from the Debt Management Office (DMO) showed that as at December 2011, the total external debt stock of all the states (multilateral) stood at $2.165 billion. On the Domestic debt profile for the states he said he is unable to give the exact amount because, “the Debt Office does not have it. The commission had observed with concern, the huge domestic debt profile of the states as most of them are highly indebted to various local banks in short-term borrowing and are substantially exposed to the capital market. He added, “Most of these loans are tied to the Irrevocable Standing Payment Orders (ISPOs) issued to the accountant general of the federation to deduct directly from their monthly statutory allocations. He went on, “The implication is that these debt overhangs weigh heavily on the monthly allocations due to the states thereby preventing them from meeting their minimum basic obligations to the citizens. “Deficit budgeting has become a serious challenge for most states. Even though deficit budgeting is tolerable within an acceptable limit, its endless application has endangered and forced the state governments to resort to excessive borrowing to meet their basic expenditure demands even where they have no capacity to pay back. Before Mbam went to the Senate, a year earlier, the Fiscal Responsibility Commission in its report and audited accounts for 2011, listed Edo as one of nine states being under the weight of huge debts. The commission also raised the alarm that given the rate of growth of the national debt and debt servicing, such debt was unsustainable except action was taken to reduce the rate of growth or increase the Gross Domestic Product growth rate. According to the report, the total indebtedness of Edo and other states as of December 31, 2011 was beyond the limit set by the Debt Management Office, that it should never rise more than 50 per cent of their annual revenues in the previous twelve months. For Edo, the FRC said her total indebtedness as of December 31, 2011 was more than 50 per cent of her revenue profile. The ratio for Edo stood at 56.03 per cent. The FRC said only the statutory revenue was used in this analysis because Edo state like many others refused to supply data on their IGR. In any case, the IGR is not more than eight per cent of the states’ total revenue adding, In essence, the omission of the IGR may not distort the result of the analysis. FRC also said this debt profile included external debts; money borrowed from banks and the capital market, but excluded debts owed to contractors, which could not be ascertained. It added, “It is also pertinent to observe that the non-inclusion of the outstanding debt owed to contractors and contingent liabilities may more than offset the omission of the IGR. In April 2012, a lawyer questioned the rationale behind what he described as the debt burden of the state. Barrister Prest Aigbokhan, the lawyer noted that Edos debts at the time, “stands at N33billion, with payment deferred to 2017, arguing that this could be a clog in the wheel of progress of the state in case the present administration ended. He called for judicious use of all funds accruing to the state from the federation account, excess crude, derivation, Grants-in-aid, funding from donor agencies, oil subsidy subventions and internally generated revenue (IGR), adding that “the idea of reckless borrowing to execute projects that do not yield returns is an economic suicide”. By November 2013, the Edo Peoples Democratic Party (PDP) again alerted that a total of N400 billion had actually accrued to the state coffers from some of these sources since Governor Adams Oshiomhole took office. Chief Orbih again alleged that Gov. Oshiomhole has since run the state aground with a huge debt profile. “Governor Adams Oshiomhole’s administration collected over N400 billion since 2008. This is apart from the N33.4 billion he collected in five years as security votes. He asked, “What is on ground to show for all these monies? Oshiomhole has spent N47-billion on drainages alone. He also went to the capital market to raise money for the Benin Storm Water Project. However, it is difficult to move from one point to another anytime it rains in the state. The roads are in terrible shapes and lives and properties are daily lost to floods in Edo State,” Orbih said. Orbih stated that while N136.7-billion was spent on road projects in the state in one year, “it is surprising that Governor Oshiomhole has been commissioning roads of about 200-metres.” He said that the standard of living in the state has not improved since Oshiomhole became governor, while state policies have impoverished the poor with dilapidated health care facilities, flawed local government elections, oppressive tax policies, a ban on motorcycle transport without recourse to an alternative and persistent deficit and non-performing budget among others. As it is though one of the many oil and gas rich states in the country, Edo since 2009, has been battling with huge foreign and domestic debts. Domestic debts comprising commercial bank loans, state bonds, contractors’ arrears, arrears on pensions and gratuities, salary arrears, other staff claims and other liabilities including judgment debts are now said to be in excess of N10billion. This development sees the state loosing more than 50 per cent of its monthly allocation to debt servicing. For example the deduction for most months comes up to N900million out of an average N2.9 - N3.1billion monthly statutory allocation. Often it has about N2-billion derivation fund and about N3-billion IGR to fall back on. Reacting to the controversy being generated by the government silence on the states debt profile and the position of critics like the PDP on the matter, Mr. Kassim Afegbua, one of the media aides to Oshiomhole says, “There is no government all over the world that is self-sustaining without having recourses to certain borrowings to meet up its statutory obligation. What is bad in borrowing is borrowing without using it to do that which the borrowed fund is meant for. He says that part of the debts the state is currently servicing was inherited from the PDP government from 1999 until 2007. Since this government came on stream, we have had to pay part of the inherited debt from the PDP government when they presided over the collective patrimony of Edo State. We took a bond specifically meant for the Benin water storm project, which is still ongoing. As we speak, Edo State debt stands between N11 billion and N12 billion because on a monthly basis, there is certain amount of money taken from our IGR to service the debts monthly.
Posted on: Thu, 20 Mar 2014 10:09:34 +0000

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