Deputy Speaker of the House of Representatives Benjamin Kalu has said the system of sustaining budgets through loans by the government is unsustainable.
Kalu who stated this while speaking at a stakeholders’ dialogue on the implementation of Section 45 of the Fiscal Responsibility Act, on Saturday in Lagos, said Nigeria should desist from such act, and instead focus on self-sufficiency.
The Deputy Speaker, who was represented by Mr Nalaraba Abubakar, Chairman, House Committee on Loans and Debt Management at the event, expressed disappointment that state governments were borrowing for consumption rather than focusing on long-term capital expenditure for production purposes, argued that the trend worsens the country’s inflation and inhibits economic growth.
He, however, urged state governments to explore their own potentials and enhance local production to increase internally generated revenue instead of relying solely on the Federal Government.
Kalu also expressed disappointment that the authorities in charge of monitoring inflow of grants into the country had no proper record of the grants.
“These grants do not just pass through the thin air, but by processes, which the commercial banks are involved in. It is important for commercial banks to liaise with the government by making disclosure on the inflow of the grants,” he said.
According to him, accumulation of those aids and grants are crippling the economy, which has become unbearable.
He, therefore, confirmed that the 10th Assembly was prepared to introduce legislation that would bring transparency to the processes of grants entering the country, adding that there are plans to enact a law compelling commercial banks to disclose the sources of grants, their beneficiaries, and who holds custody of the funds.
The lawmaker said: “We have billions of dollars coming into Nigeria as grants, but cannot pinpoint where the grants are going into the economy.
According to him, the compliance of the provisions of Section 45 of the FRA remains crucial to the banks and other financial institutions before lending to any government of the federation.
“Lending by banks and financial institutions contrary to the FRA 2007 is unlawful,” he said.
The Deputy Speaker further stated that it was imperative for banks and financial institutions to comply with the provisions outlined in Section 45 of the Fiscal Responsibility Act before they lend to the government.
