Following the shortfall in allocation from the federation account, the Niger state House of Assembly has given approval to the state Governor, Alhaji Abubakar Sani Bello to restructure a revolving N3.5 billion overdraft into a 36 months term loan.
The House approval is coming on heals of government and labour face off over the decision of the former to pay 70 percent of salaries of civil servants for the month of June due to shortfall from federation account.
The approval is sequel to a letter by the governor to the Assembly seeking the loan, reminding the lawmakers that the COVID-19 pandemic has affected the revenue inflows of the state, hence the need for the loan.
The Governor in a letter to the Assembly titled, “Restructuring of Existing N3.5 billion Revolving Overdraft into 36-Month Term Loan”, explained that the state had to borrow short-term funds totaling N3.5billion for what he described as “urgent needs”.
The letter further added that the borrowings were predicated on projections that the quantum of inflows from FAAC would be enough to off-set the resultant debit position of the State’s FAAC account with Zenith Bank Plc, adding that the downturn in the volume of receipts from FAAC since in the last eight months, the account has not received inflows as anticipated and the debit position has remained around N3.5billion.
“Rather than continue to hold the debit position along with the attendant cost, Government approached Zenith Bank Plc. with a proposal for the debt to be restructured into a 40-month term loan at 14 per cent par annum to enable us cleanup and put the state on a more sustainable financial position.
“After series of negotiation, Zenith Bank communicated an offer of a 36-month term loan at an interest rate of 17 per cent per annum, on a reducing balance basis, which is Competitive in terms of the market.
“We note that in the current challenging atmosphere of economic recession, government will have to continuously review its portfolio of assets and liabilities for prudent management as well as ensuring that it meets its obligation to workers in the State as well as other financial commitments of governance and capital investments”, the letter read.
The letter further urged that “the House of Assembly resolution in support of the facility is needed as part of conditions for the conversion of the overdraft required whilr seeking the consent of the Assembly to get the facility.”
When the letter was read during plenary on Tuesday, the member representing Agwara constituency, Honorable Bello Ahmed Agwara noted that the government is facing serious financial problems and the resources are not longer much after the payment of salaries to take care of other needs in the state, and therefore appealed to the house to consider it.
Also the Member representing Chachanga constituency, Honorable Ahmed Marafa said that the decision of the government to restructure the loan is a wise decision, adding that with the restructuring, the government will not feel the repayment of the loan very much.