CROSS RIVER: Wobbling In External, Local Debts

AMIDST financial uncertainty, Cross River State Government is said to be wobbling in huge internal debt profile of over N403 billion and external debt of about $100 million.

Out of this figure, the Donald Duke, is said to have left behind a N79 billion debt for the present Senator Liyel Imoke-led government. Some of the debts are from the recent bond the state secured through a commercial bank. Others are debt owed contractors and others. And worse still, salaries have not been paid, as at when due. The state now uses two months allocations to settle workers’ pay and civil servants are grumbling. January salary is just being paid.

Allocation from the Federation Account though regular, is poor, due to heavy deductions at source resulting from the state’s huge debt.
Activities in the state have almost come to a halt, as several projects, such as the stadium extension; various roads and many others have been suspended.

A retired civil servant, Comrade Philomena Eyo, who is now into small scale business, said, “the financial status of Cross River State is so bad that retired civil servants that live on drugs and the aged, who cannot afford to eat or drink, are just dying.”

Governor Liyel Imoke of Cross River State proposed a 2015 Budget size of N149.442 billion, saying the sum would, in line with previous appropriation estimates, cover a capital/recurrent expenditure rate of 60:40 per cent as a way of propelling growth and development in the state.
Due to dwindling finances of the state, he said that the proposed budget represents a decrease of N26.87 Billion over the 2014 appropriation. However, former Vice Chancellor of the University of Calabar, Professor Kelvin Ogon Etta, puts the total debt burden of the state at over N403 billion, describing it as worrisome and frightening.

The octogenarian said that Cross River State debt profile was about 80 billion after the exit of Duke in 2007, and expressed worry that the current N403 billion debt would place the state in a very uncomfortable situation and successive regimes would also find it difficult to develop infrastructure.

He said, “it might well be that, like Tinapa, they might have to equally sell off more public infrastructure in the state in order to get even; but this will be at the expense of future generations.”

But the Chairman of the House of Assembly Committee on Appropriation and Finance, Dr Jake Otu Enya, who did not disclose the actual debt profile of the state, denied such huge debt of N 403 billion, saying the state’s total debt burden was within manageable limits.
Enya noted that the Tinapa debt of N79 billion was just one of several inherited by the Imoke administration, culminating in the state’s financial problems today.

According to Enya, “the debt profile of Cross River State did not start from today. We inherited it from the former government. I was the chairman of the panel set up by this House to investigate the activities of Tinapa. And I went into it for two to three months and presented a report before this House. We know the level of indebtedness as at when the last administration left the state. Most of the problems we have today financially are as a result of that indebtedness of about N79 billion as at then for Tinapa alone.

“We had other debts, which were deducted at source from the Federation Account. We have the problem of Bakassi. All of you are living witnesses. We had a problem of the 76 oil wells that left Cross River. If not the instrumentality of the present administration it would be very difficult.
“It is quite unfortunate that we are trying to see how best to bring in the best financial management policy that will actually re-position Cross River State for the interest of all. People will not even ask how Cross River State government is paying salaries, but they are very anxious to know why the state owes salaries for one month or two, as the case may be.

“We have states that their allocation from the Federation Account is about N18 to N19 billion, while we have a return of only N4 billion. We do not owe salaries, but those states owe up to six months. The heavens have not fallen, so why only in Cross River State. I thought that by now people should be commending the governor for his ingenuity and managerial acumen that he has been able to manage the state, particularly paying the salaries on a monthly basis”

It is no news that the finances of the state is low and desperate especially with the loss of 76 oil wells to Akwa Ibom State, even though the Federal Government has been giving to the state a palliative of about N400 million monthly after an initial payment of N6 billion in June out of N15 billion.

The Guardian gathered that the state is handling some mega projects, which are taking a toll on its finances. Some of the mega projects include, the development of the Summit Hills, the recently commissioned by pass, the Ikom-Okorogba-Oban road, the suspended U.J. Esuene stadium project and few others.

To manage its various projects and debt profile, the state government was forced to dip its hands into the state reserve funds, which as at October 2014, stood at N6.080billion after deducting the N800million withdrawn last year and the N1.5 billion this year for the Institute of Technology Management (ITM) projects. The then Donald Duke regime had instituted the special fund for the state.

Imoke explained that in 2013 fiscal year, “the sum of N20 billion was provided for debt servicing. Cross River State will continue to honour its debt obligations to creditors. So far, we have honoured our debt obligations to the tune of N15 billion. There is a settlement agreement proposed by Assets Management Corporation of Nigeria (AMCON) to buy over the outstanding Union Bank of Nigeria (UBN) indebtedness of N18.5 billion and to invest another N26.9 billion in making the Tinapa project operational and profitable”.

In 2015 budget, he said, “we are proposing the sum of N16.395 billion to service our debt obligations. We shall partner with the national Debt Management Office (DMO) and other international debt management groups to maintain a sustainable debt profile and ensure that we comply with international best practices”.

Meanwhile, he said, “the state has floated a bond issue for the purpose of refinancing existing commercial loans earlier obtained to prosecute various developmental projects. The benefits of this Bond include, reduced monthly interest and principal repayment rates, which will be put in place by regulators. This is attributable to the hard work and determination of this administration in keeping faith with agreements to service inherited and existing loans; while restructuring other funds and ultimately lead to savings for the state, which the incoming administration will make use of. The decision to approach the capital market now is due to our recently meeting the financial market threshold”.

This N40 billion bond has been strongly criticised by the public, saying it is another loan that would further put the sate in debt. However, the Commissioner for Information, Chief Akin A. Ricketts, has querried this suggestion, saying the state is not taking a new N40 billion bond from the capital market as currently being misconstrued by a section of the general public.

Ricketts pointed out that government, “is only approaching the capital market for the restructuring and refinancing of a part of an existing bank loan with bonds.”

This option, he emphasised would ease the pressure on the state’s cash-inflow, elongate the loan tenor and increase its liquidity, so as to enhance the total completion of some legacy projects of the Governor Imoke-led administration. Meanwhile, the wobbling continues.