The Delta State House of Assembly on Wednesday gave its nod to the request of Governor Ifeanyi Okowa for the restructuring of the state’s outstanding loans of N69.8 billion in commercial banks into Federal Government of Nigeria bonds.
The Governor noted in the letter that since the Federal Government has a repayment period of 15 years to 20 years or 180 months to 240 months as against the maximum of three years to four years tenure of commercial banks loan facilities, it would not be out of place to key into such facility.
In Okowa’s letter to the House, signed by his deputy, Barrister Kingsley Otuaro, the governor said the inability of many states in the country to meet up with their salaries obligations due to the continuous decline of revenue from federal allocations, which worsened their huge debts profile, had burdened the bank loans.
The letter, addressed to the lawmakers, read by the Speaker, Rt. Hon. Monday Igbuya, on the floor of the House on Wednesday at an emergency sitting of the House, was swiftly approved.
“Arising from the above, the Debt Management Office (DMO), on 30th June 2015 requested the state governments to apply to the Federal Ministry of Finance for a restructuring of its outstanding commercial bank loans into the Federal Governmnet Nigeria (FGN) bonds,” the letter read.
According to the Governor, the request for the approval was endorsed by the State Executive Council on July 13, 2015 before it was forwarded to the House for further approval.
Because the Governor listed the benefits of the bond to include longer repayment period for the loan, reduction of the monthly debt service burden as well as savings in the amount required for debt service due to lower interest rates when compared to the interest rates on commercial bank loans, the request was speedily granted.
In two separate motions moved by the Majority Leader of the House, Hon. Tim Owhefere, one, for the receipt of the letter and two, for the approval of the request, the House unanimously adopted the request.
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