The Secretary to the Government of the Federation (SGF), Sen. George Akume, has warned financial institutions to follow provisions of the Fiscal Responsibility Act (FRA) when lending to governments and their institutions.
Akume made the call in a keynote address at a Stakeholder Dialogue, on Saturday, in Lagos.
A statement by Bede Anyanwu, Head of Strategic Communications at the Fiscal Responsibility Commission (FRC) quoted the SGF as saying the dialogue aims at promoting fiscal discipline.
Represented by one Dr David Eze, affirmed that following the rule would ensure that borrowing is done the right way to improve fiscal sustainability.
He encouraged all stakeholders to commit to more prudent management of public finances to achieve desired outcomes.
The Executive Chairman of the FRC, Victor Muruako, also echoed Akume by calling on all Nigerian banks to adhere to the provisions of the FRA 2007 in their lending practices.
“The Fiscal Responsibility Act 2007 is Nigeria’s foremost legal framework for the promotion, monitoring and enforcement of fiscal discipline.
“Section 45(2) of the Act stipulates that lending by banks to governments or their agencies in contravention of the provisions of the Act shall be unlawful.
“Part X of the act provides guidelines for borrowing by government agencies and public institutions. It includes the requirement for obtaining the necessary approvals and proof of compliance to ensure the sustainability of loans.
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“Recognising the critical role that loans play in driving socio-economic development, the FRC brought banks together with regulators, policymakers and government in the dialogue to highlight the provisions of the FRA on responsible lending.
“Discussions focused on measures to enhance compliance to improve the nation’s debt management practices,” the statement read in part.
Muruako emphasised the importance of compliance with the FRA to improve loan performance, to maintain macroeconomic stability.
“We are committed to good corporate governance, fiscal stability and pursuit of economic development to improve the lives of citizens.
“We, therefore, enjoin all stakeholders to support the macroeconomic reform initiatives of President Bola Ahmed Tinubu’s administration
“This is by ensuring more fiscal discipline in line with the provisions of the FRA 2007,” he said.
Mr Greg Jobome, Executive Director of the Risk Management Division, Access Bank responded on behalf of the banks.
Jobome said banks would continue to work together with stakeholders to foster responsible lending practices, transparency and accountability.
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