Don't Miss

Stockbrokers seek borrowing limit removal for states, LGs

By BusinessNews Staff on April 26, 2014

The Chartered Institute of Stockbrokers has urged the Federal Government not to limit the amount that states and local governments can borrow from the capital market.

The President, CIS, Mr. Ariyo Olushekun, made the call on Thursday in Abuja at the third national workshop of the institute.

The workshop, with theme, ‘Update on the Transformation Agenda: Expectations from the private sector’, focused on four critical sectors of the economy: trade, investment, energy and agriculture.

Under the revised external and domestic borrowing guidelines covering 2013 to 2017 released by the Debt Management Office, any loan to be raised from the domestic capital market must conform to the requirements of the Investments and Securities Act, 2007.

Under the guidelines, the total amount of loans outstanding at any particular time, including the proposed loan, shall not exceed 50 per cent of the actual revenue of the body concerned for the preceding 12 months.

Similarly, the guideline empowers the DMO to conduct a debt sustainability analysis to ascertain that the monthly debt service ratio of a sub-national, including the servicing of the debt issuance being contemplated, does not exceed 40 per cent of its actual monthly revenue of the preceding 12 months, and make recommendations to the Minister of Finance for approval.

However, Olushekun said the need to remove the debt ceilings in states and local governments became imperative since governments at all levels needed to be involved in creatively mobilising and deploying funds to bridge the mass infrastructural deficit needed to revamp the economy.

[Punch]

headline