Lending to Governments: SGF urges banks to follow FRA rules

Sen. George Akume, Secretary to the Government of the Federation (SGF), has urged banks to adhere to the rules of the Fiscal Responsibility Act (FRA) while financing to Federation governments and organizations.

According to Bede Anyanwu, Head of Strategic Communications at the Fiscal Responsibility Commission (FRC), Akume made the request during a keynote lecture at a Stakeholder Dialogue in Lagos on Saturday.

He stated that the debate was intended to promote budgetary responsibility.

Dr. David Eze, a staff member in the SGF’s Office, represented Akume.

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.

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.