Successive administrations ignored a key provision of the Fiscal Responsibility Act which mandated the President to set consolidated debt limits for the three tiers of government, checks by Sunday PUNCH have revealed.
A report by the Fiscal Responsibility Commission said non-compliance with the provision had resulted in the abuse of the procedure for the demand and procurement of loans by the federal and state governments.
It has also made it difficult for the FRC to carry out its constitutional role of monitoring excesses and infringements by government in loan procurement.
Section 42(1) of the Fiscal Responsibility Act, 2007, provides that “The President shall, within 90 days from the commencement of the Act and with advice from the Minister of Finance subject to approval of National Assembly, set overall limits for the amounts of consolidated debt of the three tiers of government”.
However, since the enactment of the FRA, 2007, the consolidated debt limits of the federal, states and local governments have not been set by any President.
The FRC, in its 2018 Annual Report, disclosed that efforts to ensure that a limit was set on the consolidated debt of the three tiers of government, for a more sustainable management of public debt, have not been successful.
“The commission, in a bid to ensure that this all-important requirement of the Act is fulfilled, has engaged the Minister of Finance through memos and reminders, yet, the situation remains unchanged.
”This limit has not been fixed and this action has resulted in the abuse of procedure for the demand and procurement of loans by all the three tiers of government.
“When the limit is set, it becomes easier to monitor excesses and infringements of various governments,” the FRC said in the report.
Section 41(1)(a) of FRA, 2007, specified that borrowings by the governments in the federation should be for capital expenditure and human development.
Also, Section 42(4) of FRA, 2007, mandated the FRC to compile and publish, on a quarterly basis, a list of the governments in the federation which have exceeded the limits of their respective debts by indicating the amount by which the limits were exceeded.
The FRC report explained that “as the debt limits have not been set, it becomes difficult for the commission to execute this mandate.”