The Anambra State Government has said it is still servicing loans inherited from the administrations of former governors Peter Obi and Willie Obiano, even as it maintains that Governor Chukwuma Soludo has not borrowed from any commercial bank since assuming office.
The Commissioner for Finance, Izuchukwu Okafor, said the state’s debt burden had fallen by more than 83 per cent under Soludo, with the administration also clearing several inherited domestic obligations.
Okafor disclosed this during a Ndi Anambra podcast uploaded by Anambra State New Media on Monday while explaining the state’s finances and debt position.
He said repayments on loans secured by previous administrations continued to be deducted from Anambra’s allocation through the Federation Account Allocation Committee, including obligations dating back to the Obi and Obiano administrations.
‘Yes, every month during our FAC meetings, and when you see the schedule of FAC, you will notice there were substantial, significant deductions from our own FAC because of loans previously borrowed by previous administrations,’ Okafor said.
‘These loans were borrowed, you know, during the time of, even, not the immediate predecessor, even during the time of Peter Obi and Willie Obiano, His Excellency, the past governors,’ he said.
According to the commissioner, the Soludo administration had focused on managing the inherited obligations while avoiding new commercial borrowing.
‘It’s on record, you know, that this administration has not borrowed a kobo from any commercial bank since the inception of this administration,’ he said.
Okafor said the government had also settled a number of legacy liabilities, including unpaid contracts, gratuity and pension arrears, bringing the state’s domestic debt close to zero.
‘But I will give you an example for our domestic debt, the control, the legacy, what we call legacy debts, you know, the contracts that were not paid, not owing, the gratuity arrears, pension arrears, we’ve been able to clear all that,’ he said.
He added, ‘In terms of, so, our domestic debt as of today is near-zero balance.’
The commissioner attributed the reduction in the overall debt burden to repayments made by the administration, saying several inherited loans had already been settled.
‘But I will also say that Mr Governor has not borrowed a penny. We have been able to manage the debt, the state debt, very well, that we have brought it down by more than 83 per cent as of today. I’ve been able to repay back most of these loans,’ he said.
External obligations, however, remain part of the state’s financial commitments. Okafor explained that repayments on some foreign-denominated loans are deducted from the state’s federal allocation under the terms attached to the facilities.
‘But following as well, external debts, which is foreign loan-denominated debts, when you look at it, because there are some covenants around the period it will take to pay off these loans, particularly deducted as such when we are doing FAC,’ he said.
‘Before they limit Anambra’s own allocation, they will deduct it as such, because most of them, World Bank loans and other loans, they committed.’
Okafor also disclosed that the state had recently fully repaid one of its debts.
‘There is one debt that we recently paid off, CAGS,’ he said.
He said the reduction in inherited liabilities had given the government more room to finance other priorities.
‘So, in a nutshell, I’ve been able to, you know, create more fiscal space for Anambra State,’ Okafor said.
He added, ‘This administration has been able to create more by paying off, you know, backlog of numerous debts inherited from previous governments, starting from the time of Peter Obi.’