The Federal Government has warned states and local governments against borrowing from financial institutions without a Certificate of Proof of Compliance from the Fiscal Responsibility Commission (FRC).
FRC issued the warning during a financial management workshop attended by the 23 local government chairmen in Kaduna State on Tuesday where it said obtaining loans without an FRC certificate were not only against the law but had serious legal consequences.
FRC’s Executive Chairman, Victor Muruako, who was represented by the commission’s Director of Legal Services, Investigation and Enforcement, Charles Abana, affirmed this.
Abana averred that states and local governments needed to understand that the Fiscal Responsibility Act of 2007 did not permit them to borrow for everyday running costs.
Rather, according to him, loans were only permissable for projects like infrastructure and human development that have long-term value.
The commission, in a statement its Strategic Communication officer, Bede Anyanwu released also described the practice of spending public money without approval in the budget as “fiscal haram,” which damages public trust and slows down development.
“Every kobo spent must have value for money. Public resources must be planned, budgeted for, properly appropriated and disbursed towards the execution of projects that positively impact the lives of the people,” a part of the statement read.
