The Gombe State Government has said the 53.7bn loan it is applying for is not a sign of mortgaging the future of her citizens, but will enhance the development of the state.
Recently, the government approached the state House of Assembly to seek N18.7bn FGN Intervention Facility with a 30-year tenure and a two-year moratorium and N35bn Sukuk bond, totalling 53.7bn which did not go down well for some groups.
Recall that a group under the aegis of Gombe Good Leadership Association issued a viral statement entitled, “A Call to Stop the Gombe State Borrowing Governor from Mortgaging the State.” The group accused the state government of leading the state into perpetual bankruptcy.
But according to a statement made available to journalists on Tuesday, by the Commissioner for Information, Julius Ishaya, the state government explained that loans were a useful instrument so long as they yielded ample development.
Ishaya revealed that the state had a healthy debt profile, unlike the previous administration that accessed similar loans but did not complete the supposed projects.
According to the commissioner, the Muhammadu Yahaya government has brought sustainable development with little resources to the state, adding that it had successfully put the state in a sound footing.
The statement partly read, “The desire of the Muhammadu Inuwa Yahaya administration to bequeath a better and more economically viable state brought about the idea to raise the N35bn Sukuk bond. A painstaking review and evaluation of our state of finances was undertaken. This revealed a funding gap that needed to be hedged in order to enable government deliver on its mandate. Again, the time value of money and low rates of interest played major roles in taking the decision. This is aside from the need to ensure the completion of abandoned projects of the past administration.
“At present, the debt-to-revenue ratio of the state is one of the lowest in the country at about 22%, far less than the 73% of the Federal Government. Recall that this ratio, due to the reckless misapplication of facilities by the last administration, had overshot the 20% maximum limit and made it impossible for the present administration to adequately finance its projects.
“The review of the ratio to 40% now provided the window for the state to access funding. The proposed bond proceeds will be utilised to fund Phase 1 of the Muhammadu Buhari Industrial Park, the Gombe Capital Special Development Zone, which will include a new state secretariat complex, a new state assembly complex and a new judiciary complex – a replica of the Three Arms Zone in Abuja. Part of the proceeds will also be used for the expansion of the Gombe Regional Water Project for which the FGN is also making a 30% contribution in the over N7bn project. The bond is designed in a way that it will not to have any negative effect on the state throughout its term.
Ishaya noted that the immediate past administration left a debt burden of over N124 billion in loans/bonds, pension/gratuity arrears and contractors’ liabilities, adding that the current administration had been servicing it.
“The Muhammadu Inuwa Yahaya administration pays N900.4m monthly to service the aforementioned inherited facilities! More worrisome is the fact that these loans were not utilised by the previous administration for the purposes they were obtained. Due to its determination and desire to uplift the living conditions of our senior citizens, the current administration has cleared over N2.4bn gratuity arrears and is still poised to pay another tranche by December 2021.
“The inherited bonds raised by the past administration cumulatively in the sum of 25bn as earlier mentioned for infrastructure were spent without completing most of the projects,” the statement added.