The Anambra State Government says it is still servicing loans inherited from the administrations of former governors Peter Obi and Willie Obiano, despite insisting that Governor Chukwuma Soludo has not obtained any commercial bank loan since assuming office.
The state Commissioner for Finance, Izuchukwu Okafor, disclosed this during an episode of the Ndi Anambra podcast published by Anambra State New Media on Monday.
Okafor said the Soludo administration had reduced the state’s overall debt burden by more than 83 per cent through repayments while also clearing several inherited domestic liabilities.
According to him, deductions for loans obtained by previous administrations are still made from the state’s allocation through the Federation Account Allocation Committee (FAAC).
“Yes, every month during our FAAC meetings, and when you see the schedule of FAAC, you will notice there were substantial, significant deductions from our own FAAC because of loans previously borrowed by previous administrations,” he said.
He explained that some of the obligations dated back to the administrations of Obi and Obiano.
“These loans were borrowed during the time of, even, not the immediate predecessor, even during the time of Peter Obi and Willie Obiano, the past governors,” the commissioner said.
Okafor maintained that the Soludo administration had deliberately avoided fresh commercial borrowing while concentrating on managing and repaying inherited obligations.
“It’s on record that this administration has not borrowed a kobo from any commercial bank since the inception of this administration,” he said.
The commissioner also said the government had cleared several legacy liabilities, including unpaid contracts, gratuity arrears and pension arrears, leaving the state’s domestic debt at what he described as a near-zero level.
“But I will give you an example for our domestic debt, the control, the legacy, what we call legacy debts—the contracts that were not paid, the gratuity arrears, pension arrears—we’ve been able to clear all that,” he said.
“In terms of our domestic debt, as of today, it is near-zero balance,” he added.
Okafor attributed the significant decline in the state’s debt burden to repayments made under the current administration, saying most of the inherited loans had either been settled or substantially reduced.
“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.
He, however, noted that Anambra still has outstanding external debt obligations, including foreign-denominated loans whose repayments are deducted from the state’s federal allocation in accordance with the terms of the facilities.
He specifically mentioned World Bank-related loans and other external obligations, saying deductions are made before the state receives its net allocation.
“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 FAAC,” 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,” he added.
The commissioner further disclosed that the state had recently completely repaid one of its outstanding debts, which he identified as CAGS.
“There is one debt that we recently paid off, CAGS,” he said.
According to Okafor, the reduction in inherited liabilities has created additional fiscal space for the government to fund development priorities across the state.
“So, in a nutshell, I’ve been able to create more fiscal space for Anambra State,” he said.
He added that the administration had expanded the state’s financial room by paying off a backlog of debts inherited from successive administrations, including those dating back to the tenure of former governor Peter Obi.
