22 July 2014, Port Harcourt – A group, the Niger Delta Citizens and Budget Platform, NDCBP, has expressed concern that the external debt profile of Rivers State has hit $322 million with the approval of $280 million World Bank/African Development Bank (AfDB) by the state House of Assembly.
It said it was worried over what it described as the constant recourse to borrowing and the rising external and domestic debt profile of the state.
The NDCBP, a coalition of non-governmental organisations interested in transparency and accountability, in a statement issued in Port Harcourt yesterday, said it had previously advised the state government against predicating a significant percentage of its programmes and projects on funds expected to be derived through borrowing either as bonds, grants, domestic or external loans.
The statement signed by its Coordinator, Ken Henshaw, the NDCBP said the recent approval granted by the state House of Assembly for $280 million concessionary loan to be taken from the World Bank and the AfDB for the purpose of providing water and sanitation in the state would only drive the state deeper into debt.
According to Henshaw, “Since 2008, Rivers State has experienced a steady rise in the amount it owes external creditors. In 2008, Rivers State owed $32.3 million which increased to $33.7 million in 2009. By 2010, it rose to $35.5 million and decreased to $33.8 million in 2011, only to rise again to $36.6 million in 2012 and $42.6 million as at the end of 2013. The current external debt figure places Rivers State in the 20th position on the external debtor list.
“If the Rivers State government proceeds to borrow the $280 million approved by the state assembly, the external debt profile of the state will increase to $322 million, making it the second most indebted state in Nigeria, behind Lagos State.
“This is without the addition of a significantly large domestic debt amount which stood at N81.4billion and represented 5.2 per cent of the total domestic debt of 36 states as at the end of 2012.”
He also expressed concern over the cost of servicing the debts, adding that it was already taking a toll on the finances of the state.
His words: “A major concern in this regard, is the cost of servicing these debts. The budget of Rivers State indicates that the burden of debt service payment is already taking its toll on the finances of the state. Between 2010 and 2011, there was an increase of 2,500 per cent in debt servicing re-payment.
“The amount of money which the Rivers State government sets aside for the repayment of debts, increased from N250 million to N6.250 billion. This trend resulted in the reduced capacity of the government to pursue infrastructural development.”
He also expressed concern that the state would embark on a new water project even after the governor had stated in his 2014 budget speech to the house of assembly that he would not go into new projects but would concentrate on completing on-going projects.
“This creates the impression that the rationale for this loan came as an afterthought- only after the budget had been passed and approved,” Henshaw said.
According to the NDCBP, “The more prudent approach to development will be for the government to grow its internally-generated revenue base through lucrative investments, a more efficient taxation system, a drastic cut-down on wasteful expenditures, and the blocking of all avenues for leakages.”
– This Day