The Federal Government of Nigeria has barred banks in the country from giving loans to state governments.
The decision was taken in line with the Fiscal Sustainability Plan, FSP, which has been agreed to by the Federal Government’s economic team and state governors, to ensure prudent management of sub-national resources.
comes as the Central Bank of Nigeria, CBN, will today announce details of the much anticipated ‘flexible’ foreign exchange rate policy.
President Muhammadu Buhari’s administration, Finance Ministry sources said, was disappointed at the manner some past and current governors took loans from banks and misapplied such funds, while mortgaging their states’ finances.
Currently, some states are left with too little to meet even their recurrent obligations, after deductions are made from their monthly federation account allocations.
Rather than bank loans, the Federal Government asked states to source funds from the capital market for their infrastructure development.