Senate rejects Kaduna $350m World Bank loan request. - FAITH ADAMA'S BLOG

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Thursday, 29 March 2018

Senate rejects Kaduna $350m World Bank loan request.


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The Senate on Thursday declined the approval of $350 million World Bank loan requested by Kaduna State Government.
The rejection of the loan request followed the presentation and consideration of the Senate Committee on Local and Foreign Debts which asked the upper legislative chamber to turn down the request.
The Chairman of the Committee, Senator Shehu Sani (Kaduan Central), who presented the report said “the Committee recommended that the Senate do reject the request of $350 million for Kaduna State as contained in the 2015 2018 External Borrowing (Rolling) Plan of Mr. President, Commander-in-Chief of the Armed Forces.”
Apart from Sani who heavily criticized the loan request, two other senators from Kaduna State – Suleiman Hunkuyi (Kaduan North) and Danjuma La’ah (Kaduna South) – also opposed the loan.
The Committee in its conclusion noted that “with the high total debt stock of Kaduna State at the moment, the new borrowing sought, will make the debt service to revenue ratio high, thereby worsening the state government’s ability to meet its other basic obligations to the people and further erode the economic viability of the state.”
The Committee noted that based on the submissions and interactions with invited government officials, the following observations were made:
  • That the Development Policy Operation, DPO (Budget Support) of $350 million for Kaduna State was approved by World Bank in 2016 and captured in 2016 – 2018 borrowing plan as approved by the National Assembly.

  • That the credit facility has an attractive low financing data of 1.25 per cent interest; moratorium of five years and a 25 year maturity tenor.

  • That the facility is already captured in the 2016-2018 Medium Term Expenditure Framework (MTEF).

  • That according to the latest Debt Management Office figures, Kaduna State has a total debt stock of $232.1 million.

  • That approving the current loan request of $350 million for Kaduna State will bring its total debt stock to $582.1 million.

  • That if this loan request is approved, the new total debt stock of $582.1 million for Kaduna State will be unsustainable and necessarily attract huge financial burden on the meager federal allocation to the state