Saturday, 16 March 2013

RSG, ACN Clash Over External Loans

…As DMO Says Government owes N18.4B to Banks: N86.7 Billion to Contractors

…We’ve been Vindicated - ACN
By Chinedu Uchegbu
Following revelations by the Debt Management Office (DMO) that Rivers State is indebted to domestic commercial banks to the tune of N18.497 billion and another high stock of N86.755 billion to contractors that have delivered services and have been certified, the Rivers State Chapter of the Action Congress of Nigeria (ACN) has once more lashed out at the Amaechi’s administration, saying that the outcome of the Domestic Debt Data Exercise for the states in the country by DMO has justified its criticism against Governor Amaechi’s continued recourse to financial institutions and other external sources for loans.

Reacting to the DMO report, the CAN in a statement issued and signed by its publicity secretary, Jerry Needam, said it is wrong economic planning to depend on loans for capital development that yield no interest which it has always stood against. Click on read more below to continue reading...

Jerry Needam regretted that all the alarm raised by the ACN and the cries of the public have fallen on deaf ears, noting that the DMO is equally alarmed at the rate of  borrowing by the state, considering what accrues to it from internally generated revenue and the federal allocations.

“If Gov. Amaechi is a listening type,” the ACN spokesman, Jerry Needam argued, “he should have realized that it solves no problem to borrow money to pay a debt as that would create more problems for the state.”
“This is also the reason why there was no proper accounting system in the way and manner monies are collected and expended by the relevant authorities and agencies since the government that ought to monitor them already had its mind fixed on where to collect money.” The ACN alleged.

The ACN wonders what other excuses Gov. Amaechi and his information managers will give to their gullible audience on his penchant for borrowing as confirmed by the DMO report.
Likening the PDP ruling Amaechi-led government to someone that is never satisfied with little he has, the ACN’s mouthpiece, Jerry further stressed that Amaechi, having been so obsessed with borrowing will continue to do so for reasons best known to him, not minding the odds.

Jerry Needam however regretted the untold hardship such an economic miscalculation will plunge the state into and the enormity of the accumulated debts for the incoming administrations when the PDP would have created all the havoc and left.

He advised Gov. Amaechi to begin now to make a u-turn before it’s too late to do so, referring him to the current risk weight assigned to direct lending by the Central Bank of Nigeria (CBN) which has been increased to 200%.

It would be recalled that Amaechi announced to the state in 2008 that he would not collect the loans to run his government.
Experts and civil society activists are alarmed at the huge debt profile of the state government. A civil society group disclosed that in 2011, the state government spent N6.25 billion as ‘Debt Services and Repayment of Foreign Loans/Credit’.

In 2010, N250 million was allocated for this purpose: according to the group, “these figures indicate a staggering increase of 2500% in debt servicing and repayment by Rivers State is not only alarming, but also indefensible.

The state’s fortunes are fast dwindling, leading to a new dependence on borrowing under any guise. If the current trend should continue, more and more of the state’s resources will go into debt repayment”.
It would be recalled that the State Commissioner for Finance, Dr. Peterside Chamberline, had earlier explained that the Amaechi administration had borrowed N30bn in October 2010, an amount that was paid off in September 2011 and that another loan of N20bn was accessed in July 2011 from Guaranty Trust Bank and Zenith Bank and noted that a substantial part of the loan from Zenith Bank ahd already been paid back. 

The commissioner further pointed out that the funds were to be used to finance the state’s ongoing electricity project, which would be completed by December 2012.
Recently, the state government announced that its Internal Revenue (IGR), has hit a landmark  N9,591,046,990.43 in February, the highest so far in the history of the state, even as Rivers State Governor, Rotimi Amaechi said in London that the state started the repayment of N120 billion loan it accessed from the banks to speed up project implementation.

Amaechi had expressed delight over the N9.5 billion generated in February, saying the state can exceed the amount with the current reforms in the sector.
As at January this year, the IGR was N.6.2 billion, a far improvement from N2.5 billion made before the Amaechi administration assumed office in October, 2007.

Shortly after assuming office, the IGR steadily rose to an average of N5.6 billion monthly and was boosted by the tax reforms of the new administration.
Excited with the new revenue statistics, Gov. Amaechi, through his chief press secretary, Mr. David Iyofor told pressmen that the state government is bent to surpass the landmark.

His words, “He is very happy with the figure of N9.5 billion for the month of February. Gov. Amaechi is happy with what our partners in the tax project, and has urged them to continue on this path.
“He believes the state can do better than this figure of N9.5 billion, and has clearly told them to improve on it”
The governor further asserted that the new IGR is a clear testimony of reforms in revenue generation in the state, adding that “with a robust tax reform policy, the state can do very well in internally generated revenue.”
He therefore, urged Rivers people and corporate bodies to continue to support the Rivers State Board of Internal Revenue and the Skye Bank tax partners by promptly paying taxes for sustainable growth and development of the state. 

With a good and buoyant tax system, he believed that the government would be able to execute more developmental projects.
On the N120 billion loan repayment, Gov. Amaechi said, “We pay the loan monthly; last month, we paid N6 billion to GTB out of the money we are owing them. This month we are thinking of paying N7 billion.”
“The government can do this because our IGR has improved significantly, so we are paying from it.”

He explained that the loan was obtained as a “bridging finance” while the state was awaiting the monthly allocation from the Federal Government.
“If we continue to wait for the Federal Government to pay us our monthly allocation, we won’t e able to implement all our projects.

So what we did was to take the loan and move ahead in our development drive and payback from our 1GRO and monthly allocation from the Federal Government,” he explained.

The governor, who also spoke on increased investment in non oil sectors of agriculture and health, said the confidence of investors had been boosted following improvement and stability in the security situation in the state.

According to him, the developmental drive in the state had generated employment opportunities for the people and especially the youth graduating from our school system.
Amaechi said that the state had overcome its security challenges and had been de-listed from the non-travel destinations by the United States.

The governor said that the hosting of Nigeria-US Bi-National Commission in Port Harcourt last year was a sign of the progress made in stabilizing the security situation.
“Investors are now allowed to come to the state; so you can see that security has really improved,” Amaechi said. He added that a British firm was handling the on-going construction of a syringe factory in the state.

Meanwhile, Rivers State Board of Internal Revenue says it generated about N9.59 billion in the month of February, 2013, representing the highest monthly IGR.

The Executive Chairman of the Board, Onene Osila Obele- Oshoko who disclosed this weekend in a chat with newsmen in Port Harcourt, said the increase was the outcome of new strategies adopted by the board.
Meanwhile, the Rivers State Head of Service, Barr. Samuel T. LongJohn, has revealed that the state government wage bill has risen to N6.4 billion.

LongJohn disclosed this in Port Harcourt while declaring open a two-week Refresher Course for administrative officers in the state civil service organized by the Establishment, Training and Pensions Bureau, Office of the Head of Service, Governor’s Office.
He said, “The wage bill, if not checked will lead to a situation where the state government will be unable to pay civil servants’ salaries regularly.”

The Head of Service frowned at the ugly trend in the service whereby civil servants are on a regular basis lobbying to be posted to ministries where they received fat salaries above their counterparts in some other ministries.

LongJohn asked that is was in an attempt to check this trend that a salary verification committee was set up to advise government on those who are entitled and those not entitled.

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