The Kwara state government has explained why it obtained N1 billion loan from a bank last week.
A group known as Kwara Coalition for Good Governance and Accountability (Kwara-CGGA) had asked the Economic and Financial Crimes Commission to probe the N1bn loan obtained by the state government .
In a statement by its Secretary General, Hassan Omoiya, the group said it has intelligence that the state government obtained the loan on 13th February from a first generation bank using the remittance of Kwara State VAT allocation due in February and March 2019 as collateral.
But, the state government in a statement by the state commissioner for Finance, Alh Demola Banu said “owing to the consistently low and unstable federal allocation, the state government often secures short term loans from banks to augment inflows to meet monthly obligations.
“These obligations include salaries, pensions and overheads as well as liabilities such as payments to contractors and gratuity arrears. States affected by the consistent drop in monthly allocation often augment the shortfall with bank loans. Kwara State is no exception.
“Additionally, banks only grant loans following due diligence which examines the capacity to repay and what the facility will be used for. Any facility obtained by the state government, therefore, goes only towards budgeted expenditure.
“It is through this prudent management of funds that we are able to pay salaries, pensions and subventions as well as fund major infrastructure besides providing repayment guarantees. This administration will also liquidate these short term loan interventions by or before it leaves office.”
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