(http://ngrguardiannews.com/images/resized/images/stories/2011/february2011/aganga_09-02-11_200_160.jpg) AS Part of the Federal Government's fiscal reform programme, state governors are no longer permitted to enter into debt obligations that will continue after their terms in office.
Minister of Finance, Dr Olusegun Aganga, while speaking to a select group of Nigerian diplomats and reporters in New York ahead of a Gala night held in his honor by Techno-Serve, an international not-for-profit organisation that seeks to cut poverty in the world, said governors would only be allowed to take loans that they could repay during their terms in office.
Emphasising that President Goodluck Jonathan's administration has saved about N12b from payrolls and salaries with the adoption of data capturing of personnel information, Aganga decried high level of wasteful spending in past governments.
The former Goldman Sachs executive said: "If state governments want to borrow externally, they should ask me... if I agree, we will take it to the National Assembly for approval; but if they can't sustain the repayment, I will I say no." Aganga explained that state houses of assembly must also write to authorise the loan proposals before the Federal Ministry of Finance would consider them.
Asked what would happen to states where the previous governors had already committed the government, the Finance Minister stated that "they will come to us to restructure the loans to make it affordable," adding that the FG knows most, if not all, the loans owed by states and "there are adequate controls."
According to him, whether it is external borrowing from the global community, or domestic borrowing by way of local bonds, or even commercial loans, the states can hardly enter into any loans without the knowledge of the Federal Government.
While calling on Nigerians abroad and at home with ideas to reach out to the government, he said the four main pillars upon which the government's strategy for economic growth stands were creating access to capital in the economy, ensuring inclusive growth, restoring barriers to growth, especially in the power sector, IT and infrastructure, and creating the right business environment in the country.
He disclosed that 333 expressions of interests, from local and international investors, had already been received for the planned sale of power generation and distribution companies, saying the "power sector will be next to the telecom industry."
According to him, the number of investors who have shown interests in BPE's privatisation plans in the power sector "far exceeded what we expected."
Explaining that state governors were initially opposed to the creation of the Sovereign Wealth Fund (SWF) he said the Federal Government was close to getting the National Assembly to pass the bill so that the SWF could effectively replace the Excess Crude Account (ECA).
Source: 'Governors Can No Longer Take Loans Beyond Their Tenure' (http://ngrguardiannews.com/index.php?option=com_content&view=article&id=42189:governors-can-no-longer-take-loans-beyond-their-tenure-&catid=1:national&Itemid=559)