Senate approves $350m World Bank loan for Ogun State

The Senate on Thursday approved US$350 million World Bank loan for Ogun State under the funds from the World Bank Development Operation (DPO)

The facility specifically will be used to finance key  programmes in Ogun State which would in turn stimulate internally generated revenue, develop critical infrastructures  that will attract private investors to the  state.

It would be recalled that the senate at its sitting on 5th July 2017 considered the request of Mr President  for the approval of the 2016-2018 External Borrowing (Rolling) Plan of states project which was later referred to the Committee on Local and Foreign Debts for further legislative action.

The approval of the loan followed the approval of the report of the committee as presented by the chairman Senator Shehu Sanni .

While presenting the report, Sanni  said the projects earmarked  by the Ogun State government to be funded from the credit facility, when fully implemented will boost the socio-economic development of the state”.

According to him, the Ogun State DPO budget for the loan was approved by World Bank in 2016 and only captured in the 2016-2018 borrowing plan as approved by the National Assembly.

He disclosed that the findings and observations of the committee also show that the credit facility had an attractive low financing rate of 1.25 per cent interest, moratorium of five years and a 25 year
maturity tenor.

The chairman informed that “the facility has already been captured in the 2016-2018 Medium Term Expenditure Framework (MTEF)”, adding that Ogun State has low and acceptable loan sustainability level, and therefore it is eligible to borrow”.

He explained that “the Development Policy Operation (DPO) is basically used to finance deficit in states’ annual budget, thereby enhancing the capacity of the state government to execute its key projects”.

The lawmaker stressed that the 10-man committee agreed that Ogun State met the various conditions by the World Bank to qualify for the loan, having “put in place institutional framework for transparent and accountable budgetary and financial purpose.”

The various projects to be funded by the facility he said would engender economic growth, increase revenue generation and create employment opportunities, stressing that “Ogun State Government has shown a high degree of prudence in implementing her annual budget”.

According to him “The World Bank DPO is a budget support facility used to finance budget gaps that governments normally encounter in implementing their annual budgets.

“It is worthy to note that World Bank normally present strict criteria for intending borrowing organization to fulfill as a prerequisite to assessing the facility.

“The provision of Sections 41, 42, 44 and 47 of Fiscal Responsibility Act, 2007 prescribe conditions for borrowing and verification of compliance limit upon which the approval of the National Assembly will be premised”.

After the critical debate of the report the senate presided over by the Deputy Senate President Ike Ekweremadu however approved the loan.