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Why Cross River decided to float N40bn bond – Imoke

By BusinessNews Staff on September 3, 2014

The Cross River State Governor, Senator LiyelImoke has shed some light on the move by his administration to float a N40 billion.

His Chief Press Secretary, Christian Ita in a statement on behalf of the governor said the instrument to be issued is not a fresh debt as misconstrued in some quarters, but a deliberate policy at freeing the state of its current debt burden.

He clarified: “The bond issued by the Cross River state government is an application to recapitalise subsisting debts in the state. It is not a fresh bond to raise fresh loans, but to renegotiate the existing debt and spread the repayment period over a reasonable time and free up the state from numerous debt accruing from 2002 when the first bond was issued by the state government in support of the Tinapa project.

“The first bond ever issued by the state government was in 2002 when the first Bond Law was passed to enable the state government to borrow funds to finance the Tinapa project.”

Ita explained that since 2002, a lot of interest has accrued to the state federation account, thereby, limiting the state capacity to raise funds to bridge the funding gap in the state annual budget.
Furthermore, he said the current N40 billionbond is an accumulated compilation of past debts arising from the 2002 bond and subsequent state borrowing, which is now being recapitalised and renegotiated with lower interest rate and longer payment period.

The statement also noted that the government has presented the request for the recapitalisation of the debt by bond.

The procedure to achieve that was that firstly, the request was presented to the state executive council and was approved. Secondly, the approval was sent to the state house of assembly for a resolution to support the bond and thirdly, the request to the state house of assembly was backed up by a law to amend the State Bond Law and a Debt Management Law.

The All Progressives congress (APC) in the South-south zone had through a statement signed by its Special Adviser, Media and Publicity/ Chief Press Secretary to the party’s National Vice Chairman, South-South, Mr. BasseyIta, had accused the Peoples Democratic Party (PDP)led state government of mortgaging the state to economic slavery by floating the N40 billion bond.

“To confirm our curiosity of the helplessness of the PDP led junta, only recently, the state’s rubber stamp legislature rose from a session with a resolution which among others approved of the execution arm to acquire through bond, a total N40 billion in the guise of rejuvenating the economy and completing so-called ongoing projects.

“What we deduce from this is that apart from being insensitive to the plight and welfare needs of the masses by previous indebtedness and financial mess it has plunged the state,” the opposition party had alleged.

[This Day]

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