News Desk
Former Kaduna State Governor, Mal. Nasir El-rufai, admitted to leaving behind financial liabilities to the tune of $577.32 million foreign debt, ₦64.54 billion domestic debt and other contingent liabilities of ₦16.06 billion for the new Governor, Senator Uba Sani during his handing over speech on May 29, 2023.
The $577.32 million external debt includes the controversial $350 million World Bank Loan structured as The Kaduna State Economic Transformation Program -for- Results [PforR], whose purpose is to improve the business enabling environment and strengthen fiscal management and accountability in Kaduna State.
El-rufai reportedly made the statement during a handing over speech to the new Governor, Senator Uba Sani, in May 29, 2023, according to the document obtained from the Budget and Debt Service Office in Kaduna, penultimate Monday, by Benjamin Y. Maigari, of Kaduna Maternal Accountability Mechanism (KADMAM).
The document dated August 14, 2023, and written by Daniel K. Harry, a real Abuja estate agent, and pastes in KADMAM WhatsApp group chat, is entitled “Kaduna State External Loans: “High Debt Servicing Cost and Currency Depreciation”.
Mr. Harry in the statement noted that “Available World Bank documents indicated that the loan was approved on June 20, 2017, became effective on April 26, 2019, though scheduled to close on March 31, 2021, but closed 9 months behind schedule on December 31, 2021 because the program needed to be included in the Federal Government Borrowing Plan.
“Whereas; the 22 months gap between approval and effectiveness was due to refusal by the 8th Senate to grant approval for the loan.
“With barely 3 months in office, the new administration of governor Uba Sani has begun to bear the brunt of repaying and servicing the state humongous foreign debts and restricts the state government’s fiscal flexibility.
“Thus impeding on the ability of the new administration to implement policies that could stimulate economic growth or provide relief during this time of fuel subsidy removal crisis and the high cost of living.
“World Bank Financial Report as of July 31, 2023 on the $350 million Kaduna State government Loan shows that the State government will pay to the Bank the total sum of $9,015,352.61 (made up of $5,645,671.91and $3,369,680.70 being principal repayment and interest / fees charges respectively).
“The equivalent in Naira of over ₦8 billion at current exchange rate of about ₦940/1$ (as at August 14, 2023).
“The huge external debt burden of approximately $600 million on the Kaduna State government has significant negative implications for its cash flows. The situation is further exacerbated by the repayment obligations and the high exchange rate of the dollar to the Naira.
“The bi-annual repayment of an estimated amount of about ₦8 billion on a $350 million loan, represents a substantial portion of the state government’s cash flows. This leaves a smaller budget available for essential public services such as education, healthcare, infrastructure development, and social welfare programs.
“Meanwhile, the high exchange rate of the dollar to the Naira, currently at about ₦940 per US dollar, further amplifies the debt burden. As the Naira weakens against the dollar, the state government needs to allocate even more of its limited resources to service the debt.
“It is instructive to state here that the sum of ₦35.4 billion has been allocated for Debt Service in the state’s 2023 Approved Budget and which might have to be reviewed in the light of current realities. Thus; reducing the availability of funds for critical developmental projects within the state.
“These situations have tendencies of forcing the state government to implement austerity measures as a short- term solution which can also have other negative consequences for the overall well-being of the citizens”, it further stated.
“In order to address these negative impacts, the Kaduna State Government may need to urgently employ a multi-faceted approach. This could involve adopting prudent fiscal management practices, diversifying revenue sources, promoting investment and economic growth, and seeking debt restructuring or refinancing options to mitigate the burden of debt servicing costs”, he advised.
Techrectory with agency report.
