Only FG Can Guarantee State Loans, Says DMO

THE Debt Management Office (DMO) Friday said it would be difficult for state governments to access foreign loans without the backing of the federal government, and has therefore urged state governments to progressively package their loans proposals in line with the federal government’s interested investments.

  Director General of the Debt Management Office (DMO), Dr. Abraham Nwankwo stated this in Benin City Friday at the on-going three-day retreat organized by the DMO for the Senate Committee on Local and Foreign Debts led by its chairman, Senator Ehigie Uzamere where he also declared that it would be illegal, unconstitutional for any state government to borrow funds externally without the approval of the Federal Government.
  He however urged the states to key into the transformation agenda of the Federal Government by focusing on other areas to generate funds outside the oil sector.
  “The constitution of the Federal Republic of Nigeria is that no state government or their agency can borrow externally without the
guarantee of the Federal Government, no state has the capacity constitutionally to borrow unless through the Federal government.
  “Any state that is interested in borrowing will package their proposal, which is sent to the Minister of Finance, then the Minister will refer to DMO and we now process that request after our own investigations.
“If what you are borrowing for is not a priority for the country, it will not be granted. And what it means is that the Federal Government must be interested in what is happening in the states because the money has to be serviced as at when due.
“We are responsible in making sure that states borrow from the right sources and that whatever they borrow is repaid as at when due” he stated.

- The Guardian

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