Banks colluding with states to bypass fiscal law — FRC

The Fiscal Responsibility Commission (FRC) has decried the rampant collusion between banks and state governments in violating the provisions of the Fiscal Responsibility Act. Speaking at the National Summit of Fiscal Responsibility in Abuja, the Chairman of FRC, Barrister Victor Muruako, noted that banks had been aiding state governments in circumventing the law, particularly with […]

The Fiscal Responsibility Commission (FRC) has decried the rampant collusion between banks and state governments in violating the provisions of the Fiscal Responsibility Act.

Speaking at the National Summit of Fiscal Responsibility in Abuja, the Chairman of FRC, Barrister Victor Muruako, noted that banks had been aiding state governments in circumventing the law, particularly with respect to borrowing.

Muruako cited Section 44.1 of the Fiscal Responsibility Act which mandates that any government or its agencies intending to borrow funds must present a detailed cost-benefit analysis of the proposed borrowing.

He said, “We are witnessing a troubling decline in accountability. In one instance, a state government’s secretary simply signed a declaration claiming compliance with the Act, which then allowed the government to proceed with borrowing. This is deeply alarming.”

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He further criticised banks for accepting such documents, noting that financial institutions had made it convenient to approve loans without thoroughly verifying compliance with the law.

He said, “We have reached out to banks and carried out extensive sensitisation efforts, but it is clear that more needs to be done. We cannot afford to remain silent any longer. This is a matter of national urgency.”

On his part, the Secretary to the Government of the Federation (SGF), Senator George Akume, directed the FRC to extend its technical support to local governments.