The Federal Government has approved a loan of N14.1 billion to Plateau State government under the Federal Guarantee Conditional Budget Support Scheme.

Plateau State commissioner for Finance, Hon. Tamwakat Weli, who disclosed this in her office today (Monday 11th July 2016), said the approval was in recognition of the fiscal prudence of Governor Simon Lalong’s administration.

The commissioner said, “The federal government has earmarked the sum of N14.1 billion naira to Plateau State. This money would be disbursed to the state in three tranches of N1.3 billion for three consecutive months. Thereafter, the balance will be disbursed over a period of nine months in equal amount of N1.1 billion only.

“The interest rate for the loan is nine per cent for the tenure of 10 years with one year moratorium before repayment begins. The repayment is secured by future allocations and funds due to the Plateau State from the federal government.”

The commissioner maintained that the development is coming at a time the state government offsets the outstanding salaries for state and local government workers with the second tranches of the salary bailout of N 5.2 billion naira secured from the federal government.

ViewPointNigeria Analysis

Since assuming office in the past one year, Governor Simon Lalong has accessed several loans and bail-outs in order to offset the 9 months salaries of workers which were outstanding at handover on 29th May 2015, and to finish yet-to-be completed capital projects.

For instance, in his first 6 months of being in office, Lalong accessed a N9.5 billion loan from a commercial bank to settle part of the workers salaries and pensions, see, http://www.viewpointnigeria.com/plsg-secures-n9-5-billion-loan-to-pay-arrears-of-salaries-and-pensions/.

While N10 billion was obtained from the federal government as infrastructure loan to finalise roads and capital projects e.g., the secretariat junction flyover project. See, report at http://www.viewpointnigeria.com/8509-2/

The receipt of the N14.1 billion loan facility will bring to total approximately N19 billion worth of loans and bailouts received by the state government in the past 2 months. The N19 billion breaks down into (1) a N5 billion facility, which was part of the initial N10 approved by President Buhari, but for which only N5 billion was initially released by CBN, until last week when the final N5 billion tranche was paid out and (2) This new bailout of N14.1 billion (which FG has said will be paid to the state in instalments).  See – http://www.viewpointnigeria.com/9773-2/

Whilst it is easy to chastise the state government and argue that taking these loans is reckless, the reality of it is that – the Government finds itself in a very desperate and difficult state, with backlog of unpaid salaries and uncompleted capital projects. As such, in order for the “Rescue government” to oil the wheels of government and get the machinery running again, government is as a matter of necessity having to access these loans.

Does this put Plateau state in an even deeper mess? Without a doubt, it does. Plateau state is unfortunately “eating its tomorrow today” – a fundamental “no-no” of running any enterprise or state. The state will go through a painful future of paying hefty loan premiums as it continues to service these numerous debts. But we have to be fair and not simply blame the Rescue administration for this, the problem started in the past, with the systemic rot, endemic corruption and reckless borrowings of the last few decades.

The Rescue government, as a matter of urgency needs to explore new avenues of revenue generation to pull the state out of this mess.

A few months back, a youth on the many Plateau fora (Daniel Bott), prescribed numerous ways of increasing revenue generation in the state. Let’s hope the government can explore some of those strategies.

count | 958

Plateau secures another loan of N14.1 billion from FG