FRC orders banks not to lend money to states without approval

The Fiscal Responsibility Commission (FRC) has urged Deposit Money Banks not to lend money to any state without the approval of the commission. 

According to the commission, the new directive is in line with the provisions of the Fiscal Responsibility Act, 2007.  

As part of the recommendations of its recent regional retreat on policy framework for strengthening fiscal transparency, prudence and accountability at the sub-national levels, the commission stated that going forward, state governments should publish their budgets online annually. It further added that states should publish on quarterly basis, their budget implementation performance report online. 

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With respect to lending to states by DMBs, a part of the recommendations read in part, “No commercial bank should lend money to states without approval from the FRC, in line with the provisions of the FRA.” 

In addition, the recommendations suggested that states introduce public financial management reforms after the pandemic such as the International Public Sector Accounting Standards, Treasury Single Account, and Government Integrated Financial Management Information System. 

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Others include the Integrated Payroll and Personnel Information System, Charts of Accounts, Medium-Term Expenditure Framework, Medium Term Sector Strategy, and Operating Surplus Template. 

The commission therefore, urged states to establish registers for the disclosure of information on beneficial owners of commercial entities to improve transparency and accountability in private sector governance. 

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The report concluded by urging FRC to sensitize relevant stakeholders like, the National Economic Council and the Nigeria Governors’ Forum on the need for the domestication of the FRA and the establishment of state commissions.