Senator representing Ondo North in the National Assembly, Prof. Ajayi Boroffice, yesterday warned management of Zenith Bank Plc against granting request of the state government for N7 billion loan.
Boroffice wondered why the government should seek loan few months to the expiration of Governor Olusegun Mimiko’s tenure in office.
He said the loan request did not enjoy the support of Ondo State people despite approval by the House of Assembly.
A statement by Boroffice’s Media Office noted that the people were not consulted before lawmakers took the decision.
The senator stated that it was unfortunate that the lawmakers traded the collective interests of the people on the altar of party loyalty.
He said: “Indeed, the reason advertised for the questionable loan request by the state government is untenable and dubious. A government reputed for doing nothing significant on infrastructural development in about seven years should be resisted from mortgaging the future of our children under the guise of borrowing to fund infrastructural deficit.
“This is the same government that could not offset outstanding workers’ salaries despite procuring N14 billion bailout funds from the Federal Government.
“Ondo State is presently faced with grievous financial challenges like cash-flow insolvency, poor internally generated revenue, low state sustainability index, huge debt burden of over N77 billion and failure to meet basic financial obligations.
“Therefore, continuous and unsustainable borrowing is not a wise option at this challenging period. Meanwhile, what is the repayment plan of this dubious loan request? What is the interest rate? Is it true that the interest rate has outrageously bloated to over 25%? Can Ondo meet the contractual obligations?
“If the repayment plan exceeds the expiration of Governor Mimiko’s term, the bank should as well start preparing provision for credit losses in its financial statements”
Boroffice advised management of Zenith Bank to learn and be guided by the decision of Access Bank to reject the loan request having realised the high degree of risk attached.
He warned that if the bank went ahead to grant the loan, it would confirm the widely held opinion in the state that it had been co-opted into the grand conspiracy to defraud people of the state
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