The Secretary to the Government of the Federation (SGF), Sen. George Akume has called on banks to follow provisions of the Fiscal Responsibility Act (FRA) when lending to Governments in the Federation and their institutions.
A statement by Bede Anyanwu, Head of Strategic Communications at the Fiscal Responsibility Commission (FRC) said Akume made the call in a keynote address at a Stakeholder Dialogue on Saturday in Lagos.
He said dialogue was aimed at promoting fiscal discipline.
Fiscal Responsibility Commission warns banks on non-compliance
Akume was represented by a staff in the SGF`s Office, Dr. David Eze.
The SGF affirmed that following the rule was to ensure that borrowing was done the right way for the right reasons to improve fiscal sustainability. The SGF therefore urged banks to comply with the FRA accordingly.
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 equally called on all Nigerian banks to adhere to the provisions of the FRA 2007 in their lending practices to government and its agencies.
“The Fiscal Responsibility Act 2007 is Nigeria’s foremost legal framework for the promotion, monitoring and enforcement of fiscal discipline.
“It stipulates in Section 45(2), 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, including the requirement for obtaining the necessary approvals and proof of compliance to ensure the sustainability of loans.
“Recognising the critical role that loans play in driving socio-economic development, the FRC brought banks together with regulators, policy makers and government in the Stakeholder 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 said.
The FRC boss emphasized the importance of compliance with the FRA to improve loan performance, to maintain macro-economic stability.
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“We are committed to good corporate governance, fiscal stability and the pursuit of economic development to improve the lives of citizens while improving our nation’s viability.
“We, therefore, enjoin all stakeholders to support the bold macroeconomic reform initiatives of the administration of President Bola Ahmed Tinubu by ensuring more fiscal discipline in line with the provisions of the FiscalResponsibility Act 2007 (FRA) .”
The chairman said that the provisions of the FRA serve to keep the lender, borrower, regulator, evaluator, assessor, and indeed the beneficiary of public sector loans on the same page.
Mr. Greg Jobome, Executive Director, Risk Management Division, Access Bank who responded on behalf of the banks. Said they will continue to work together with stakeholders to foster responsible lending practices, transparency, and accountability.
The FRC Stakeholder Dialogue brought together a diverse group of participants including banking Institutions, government representatives, economists, academics and experts in fiscal governance.
