Sunday 27 October 2013

Lagos Goes for More Loan



Despite the fact that Lagos has the highest debt profile among all states in Nigeria, the state is still
seeking more loans. On Thursday, President Goodluck Jonathan wrote the Senate to approve the second tranche of $600 million loan approved by the World Bank under a development policy operation (DPO) scheme for which Lagos applied in 2010 and approved by the National Assembly. The scheme, according to Jonathan’s letter, is to be implemented in three tranches by the state government. It accordingly said the first tranche of $200 million from the $600 million loan agreement with World Bank had been obtained by the state in 2011. The state is now seeking approval to take the second tranche of another $200 million in the borrowing plan, which the president said was not captured in the 2012-2014 medium term borrowing plan, which he earlier submitted to the parliament.
“The World Bank has therefore embarked on restructuring of the project in the face of current realities in a manner that would release US$200 million for allocation to Lagos Development Policy Operation II. This is an action that the World Bank with the support of its board can undertake. They propose that the US$200 million DPO would enable the state complete some critical infrastructure projects,” Jonathan said.
However, many people would query why Lagos maintains the highest debt profile in the country, whilst it has the largest internally generated revenue (IGR) of about N29 billion a month. As at September 2013, the Debt Management Office (DMO) put Lagos debt at N193.44 billion at the ratio of N155.4 percent. But the state’s huge debt is not unsustainable. DMO DG Nwankwo recently said no state in the country at present has debt that is unsustainable and in the case of Lagos, he says evidence abounds as to what it is using the money for.

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