Lagos to borrow N60b this week, plans another N100b in 2017
The Commissioner for Finance, Mr. Akinyemi Ashade, said the state would be going to the market in a couple of days as the Security and Exchange Commission (SEC) had already concluded the verification of projects that the fund would be used for.
At a combined Annual General Meeting (AGM) of the state bond series and rating programme at the weekend, the commissioner said: “SEC is already in the state, checking some of those projects to authenticate them. They finished their inspection on Friday and we hope that their report would go in by next week, so that we can open.”
According to Ashade, the state government needs to do deficit financing of the execution of some of its infrastructure needs to fast-track the execution of projects and give Lagos residents the best.
He said that with Lagos being the fifth largest economy in Africa due to the size of its Gross Domestic Product (GDP), a transport hub of over 70 per cent international air traffic in Nigeria and over 70 per cent of non-oil and gas seaport activities, would to a large extent put pressure on the state’s infrastructure.
According to the commissioner, the bond series, which the state government started in 2008, has had tremendous impact on the socio-economic development in the state and positively affected the lives of the people.
He also said that the state government recently restructured two of its outstanding bonds making for better management of its debt profile.
Prof. Akpan Ekpo of West Africa Financial Institute noted that the country was in a recession, and in this situation, monetary policies are ineffective. Only fiscal and structural policies could take it out of recession.
“You cannot think of tax now because you cannot increase tax when there is a recession. Therefore, government has no choice but to borrow. For me, raising bond to finance capital projects now and in the budget of next year is a right step in the right direction,” Ekpo said.
He, however, said that efforts must be made by stakeholders including the state assembly to ensure that the money borrowed is targeted at appropriate projects that can pay themselves. “They should not be borrowing to pay salaries,” he warned.