The Senate yesterday approved the request by Ogun State government to borrow $350 million from the World Bank through the State Development Policy Operation (DPO).
The credit facility, which has an interest rate of 1.25 percent, moratorium of five years and a 25 year maturity tenor, is part of the 2016 to 2018 External Borrowing (Rolling) Plan of the Federal Government.The approval of the loan facility followed senate's adoption of the report of the Committee on Local and Foreign Debts chaired by Shehu Sani (APC, Kaduna State).
Presenting the report, Sani said the Ogun State government met the various conditions by the World Bank to qualify for the loan. According to him, the state has a low and acceptable debt sustainability level.
The senator explained that the facility would be used to finance key programmes of the state to stimulate internally generated revenue and develop critical infrastructure that would attract private investors to the state.
The World Bank DPO is a facility used to finance budget deficits in state's annual budgets to enable them executes key projects for the economic development of the state.
In July this year, the senate had approved the foreign loan requests of Abia State ($200m), Ebonyi ($150m), Kano ($200m), joint request of Enugu, Kano, Plateau and Ondo ($200m) and another joint request of Enugu and Kano ($100m).It, however, deferred the approval of the request of Kaduna, Katsina, Jigawa and Ogun states. No reason was stated rather, it was said that the approval would be done in phases.
Also yesterday, the Senate approved the sum of N222 .3 billion as the 2017 Federal Capital Territory budget. The approval followed consideration of the report of the Committee on FCT presented by the chairman, Dino Melaye.
Meanwhile, northern leaders have cautioned the Senate against scrapping the excess crude account.The Secretary General of the Arewa Consultative Forum (ACF), Mr. Anthony Sani, gave the warning in a statement yesterday.He said the decision might endanger the country's economic interest.
He said: "There is no law which says that government should not save part of its revenue against the rainy day. And if there is any observed evidence of managerial imperfection in the sharing of any amount in the ECA, it should be corrected instead of scrapping it.
"It is too early for the senate to forget that it was the savings during the regime of ex-President Olusegun Obasanjo that made it possible for Nigeria to navigate the economic meltdown of 2009." Sani disclosed that it was also because the country spent the funds in the excess account under former President Goodluck Jonathan that made it difficult to exit the last recession in a very short time.