FRC Warns Banks against Giving Unapproved Loans to States

0

By Ernest Chinwo

The Fiscal Responsibility Commission (FRC) has warned that it would invoke drastic measures against commercial banks that give loans to states and other sub-national bodies without its approval.

The acting Chairman of the FRC, Mr. Victor Muruako, gave the warning in Port Harcourt yesterday at a one-day zonal retreat on Policy Framework for Strengthening Fiscal Transparency, Prudence and Accountability at the Sub-national Levels.

He said the commission was alarmed at the level of recklessness in borrowing and spending of scarce resources by states and other sub-national bodies and was determined to instill some sanity into the system.

“Our searchlight will henceforth be on the commercial banks that grant loans carelessly to some sub-national governments without approval from the commission as required by the Fiscal Responsibility Act, 2007. Such loans henceforth must follow due process or the commission will have no option than to invoke the provisions of the law against the erring entity,” he said.

He expressed dismay that since the Fiscal Responsibility Act was enacted in 2007, government at all levels had not obeyed its provisions.

“The coming into force of the FRA on July 30, 2007 and the subsequent inauguration of the Fiscal Responsibility Commission (FRC) in 2009, therefore crystalised the reform-oriented disposition of Nigeria’s post-military era, marked by a stated commitment to ending the culture of profligacy on irresponsibility in the management of public finances that had held sway for so long. The new fiscal regime had to be rules-based, rather than discretionary; transparent rather than opaque; accountable rather than reckless,” he stated.

He said the experience of the commission in the last 11 years had shown that much more than strong laws are needed if the nation would effectively break with the past habit of financial profligacy.

“The FRC in line with its mandate has continued its role of monitoring and enforcing the implementation of the FRA, 2007 by the Federal Government and its agencies and corporations. The Commission is currently developing a framework for more effective collaboration with the civil society organizations, the media and professional bodies in the achievement of our mandate,” he said.

He said the retreat was put together with support from Civil Society Legislative Advocacy Centre (CISLAC) and OXFAM to rub minds with States of the Federation with a view to assisting them put up fiscal responsibility structures and or strengthen existing ones.

In his opening remarks, the Executive Director of CISLAC, Mr. Auwal Ibrahim Musa, noted that Nigeria’s fiscal regime has been marred with lots of issues, especially financial imprudence and malpractices by public institutions, both at Federal and Sub-national levels; the unbridled borrowing culture at all levels of government as well as incapacity of the regulator to use the big hammer of sanction to defaulters.

“There are allegations on one hand and the other hand clear evidence of abuse of public offices and misappropriation of public funds by public office holders if you permit me, I will address this as Inappropriate Financial Flows (IFF) has been going on for too long and is almost becoming the order of the day. Year on year the Auditor General’s report reveals on an incremental basis number of; public’ institutions that refuse to submit audited reports to the office.

“The Fiscal Responsibility commission has in one way or the other a mandate to curb these menace that is not giving us the desired result in the acclaimed fight against corruption in Nigeria,” he said.