Fiscal Responsibility Commission has vowed to engage the services of the Independent Corrupt Practices and Other Related Offences Commission and the Economic and Financial Crimes Commission to deal with banks that give loans to governments and agencies without following due process.
It also warned the state governments to reduce fiscal deficits, build revenue surplus and ensure effective resource allocation and prudent debt management.
The Chairman, FRC, Victor Muruako, spoke during the two-day fiscal transparency and accountability sensitisation workshop in Lagos on Monday with the theme ‘Fiscal transparency and sustainable development at the sub-nationals’.
He said, “As for banks and other financial institutions that make themselves willing tools of fiscal carelessness by granting loans to some sub-national governments without regard to due process, the commission hereby reminds them that Section 45(2) in Part X of the Fiscal Responsibility Act 2007, which specifies conditions for borrowing by ‘any government in the Federation or its agencies and corporations’, reads as follows: ‘Lending by banks and financial institutions in contravention of this part shall be unlawful.
“In line with the foregoing, the commission hereby serves notice to defaulting banks and other financial institutions that the window of just using moral suasion is closing. Going forward, we intend to invoke the provisions of the law against this expressly defined unlawful act, wherever it rears its head.
“Where FRA, 2007 appears inadequate to compel, we shall aggressively invoke our collaborations with sister agencies such as the ICPC and EFCC.”
The chairman renewed the commission’s appeal to all states and local governments in Nigeria to take up the challenge of achieving the five objectives in the fiscal sustainability plan upon which were predicated the Federal Government’s ‘bailout loans’ to states in 2016.
“We also wish to use this opportunity to discourage the bad habit of some subnational governments to make loans their first and last consideration for meeting revenue shortfalls rather than considering ways of harvesting their dormant potentials for internally generated revenue,” he said.
Muruako said the event was organised as part of a series of zonal sensitisation campaigns on transparency, accountability and prudence in public finance management.
The aim of the programme was to expand and deepen the frontiers of fiscal responsibility, transparency and accountability to sub-national levels of government in Nigeria, he said.