In order to douse the tension currently brewing in Akwa Ibom State, the state government at the weekend explained that its decision to borrow the sum of N80 billion from a foreign bank, London Standard Chartered Bank International, was not an indication that the
state was broke.
It said rather such approval from the international financial community was an endorsement of financial prudence and transparency of the state.
The state Commissioner for Finance, Mr. Bassey Albert Akpan, who threw more light on the loan facility while briefing journalists in the state, argued that it was even more reasonable and productive to borrow from the international market than local market.
According to him: “It is good to state that when a government borrows, it is not that the government is broke. You are borrowing to finance your cash flow because if you have to depend on your monthly allocation, it means most of the projects would not have been completed.
“We have run this state for five years without borrowing a dime from any bank. We have also run this state for five years and have paid back every simple bankable loan that we inherited from the immediate past administration in the state. We have also run this state for five years and we have cleared every liability in terms of contractual liabilities that we inherited from the past administration.”
Akpan, who regretted the spate of criticism trailing the proposal for the state to borrow N80 billion, maintained that the state government should rather be commended for what it had achieved in the past five years in office without borrowing.
“I think it is something we should talk about that if the government has achieved this much in the past five years without a single bank loan, I think it should be commended. ”
“As I am talking to you, by May this year, once the government approves, we would start the inauguration of over 700 projects spread
across various local government areas in the state,” he stressed.
According to the commissioner, the N80 billion loan is to pay the outstanding of the N50billion earlier borrowed by the state government from the United Bank for African (UBA) last year.
The UBA, he said, gave N50 billion loan to the state government last year at an interest rate of 18.5 per cent per annum while the N80 billion to be obtained from the Standard Chartered Bank International attracts 8.1 per cent interest rate per annum.
“When we consummated the UBA facility, we were also working with international financial institution because the real essence is to bring governance at the cheapest rate to the people. We were also working based on the interest that was shown by
the international financial institution based on the performance of the governor.
“The UBA facility was meant to be a stop-gap because borrowing from local market was far easier than borrowing from international market.
Akpan insisted that the UBA facility was a double digit facility at 18.5 per cent interest rate per annum while at the same time the state
government is also working with international bank where the interest rate is about 8.1 per cent interest rate per annum; saying the “UBA facility was a bridge to support the state as at the time it came.”