The Ogun State Government on Tuesday denied that it was in the process of borrowing money and issuing bonds worth N100 billion.
The state’s Commissioner for Finance, Kemi Adeosun, refuted the claims at a press briefing in Abeokuta, the state capital.
Adeosun said that the bond instrument is not the appropriate option for the state in its present circumstances.
She said the executive had only forwarded a bill seeking to set up a legal framework to be followed before a loan is secured to the House of Assembly.
She said: “If the bill is eventually passed to law, it will serve as an instrument for financial discipline, which will be binding on the present administration and the successive administrations.”
The bill, according to Adeosun, is to repeal “existing Ogun state bond law, which is so weak and allows the government to just seek for bond loan anytime it desires.”
She said that the amount of bonds that can be accessed by any government would be determined by the previous years’ revenue and its current debt profile, adding: “When these two factors are considered, we cannot say we are doing perfectly because our income is small and our debt is high.
“We are actually on a financial recovery process and what we are doing presently is to reduce the inherited loan significantly while improving on our revenue generation drive.”
Adeosun said the state had reduced its debt from N87 billion to about N60 billion.
She also said that the state’s internally generated revenue has increased from N17.9 billion in 2010 to N25.2 billion in 2011, adding: “What we need now is not long term financial instrument like bond but medium term instruments like promissory notes and contractors financing.
“In all, I can confidently say that the financial recovery process adopted by the present administration is on course.”