The Senate yesterday rejected the request by Kaduna State government to acquire a foreign loan facility of $350 million.
The Development Policy Operation, DPO (Budget Support) of USD 350 million for Kaduna State was approved by World Bank in 2016 and captured in 2016 – 2018 borrowing plan.
According to the latest Debt Management Office figures, Kaduna State has a total debt stock of USD232.1 million since 1960.
As it stands, the current loan request of USD350 million for Kaduna State will bring its total debt stock to USD582.1 million.
Based on the high debt record of the state, Senate said if the current loan request is approved, the new total debt stock of USD582.1 million for Kaduna State would be unsustainable and necessarily attract huge financial burden on the meager federal allocation to the state.
The Upper Chamber further stated that with the new borrowing, the Debt Service to Revenue Ratio of Kaduna State will further be increased and thus impact negatively on the ability of the state to meet other basic needs of its people.
The resolution of the Senate followed a presentation of report of the Committee On Local and Foreign Debts by the chairman, Senator Shehu Sani (Kaduna Central).
According to the report, the Senate received submissions and interacted with the invited government officials, and observed that the credit facility has an attractive low financing data of 1.25 per cent interest; moratorium of 5 years and a 25-year maturity tenor.
Concurring, Senators Suleiman Hunkuyi (Kaduna North) noted that it was needless to grant the loan because due process for obtaining the facility was not followed by Kaduna State government.
According to Hunkuyi, the loan is a misplacement of priority because the projects to be executed were not stated and that stakeholders were not consulted as precondition for the loan from the World Bank.
Senator Danjuma La’ah (Kaduna Central) also kicked against the loan request saying his people had not mandated him to support the credit facility.
Deputy Senate Leader, Senator Bala Na’Allah described the rejection as a lesson for democracy, especially to governors who refuse to consult with their people and representatives before seeking such massive loan approval.
Deputy Senate President, Ike Ekweremadu who presided over plenary said, “A loan application for infrastructural development is not bad in itself but that failure to consult with representatives of the people before such a critical facility is taken is clearly undemocratic.”
Consequently, the Senate recommended that the Senate do reject the request of USD350 million for Kaduna State as contained in the 2015-2018 External Borrowing (Rolling) Plan of the President, Commander-in-Chief of the Armed Forces.
Meanwhile, Senate has adjourned sitting till 10th April, 2018 to proceed on Easter celebration.