Soludo: No plans to borrow N245bn for Anambra budget

Anambra State Governor, Prof. Chukwuma Soludo, on August 27, 2024, firmly denied claims that his administration plans to borrow N245 billion to fund the 2024 budget.

Speaking at the 33rd anniversary of the state’s creation at the Governor’s Lodge in Amawbia, Soludo refuted the reports, labeling them as false.

He emphasized that with a projected deficit of N121 billion, his administration has no intentions of taking on such a large debt.

Soludo clarified that borrowing is considered only for highly bankable projects that can generate sufficient returns to repay the debt.

He noted that despite approvals for borrowing N100 billion in 2022 and facing deficits in 2023 and 2024, the state has not borrowed any money.

Additionally, he mentioned that Anambra deliberately opted out of a recent World Bank loan allocation of N438 billion.

Background on fiscal policies under previous administrations

Anambra State has experienced varied fiscal policies under different administrations.

Historically, the state’s approach to economic management has been shaped by its revenue generation capabilities and the federal allocation system.

It has also been influenced by the economic philosophies of its leaders.

Peter Obi Administration (2006-2014):

Peter Obi, known for his prudent financial management, is often celebrated for his approach to saving and cautious spending.

Under his leadership, Anambra State was noted for its minimal borrowing.

Obi’s administration focused on cutting costs and boosting internally generated revenue (IGR).

He left office with substantial savings for the state, claiming to have handed over about N75 billion to his successor.

Willie Obiano administration (2014-2022):

Willie Obiano’s administration marked a shift from the extremely conservative fiscal policies of his predecessor.

While Obiano continued the tradition of fiscal responsibility, his government was more open to borrowing, especially for infrastructural projects.

The administration took loans to fund key projects such as the construction of bridges, roads, and the Anambra International Cargo and Passenger Airport.

However, these borrowings were kept within limits to avoid overwhelming the state’s finances.

Previous borrowing practices in Anambra State

Anambra’s borrowing practices before Governor Soludo took office have generally been cautious.

The state has not been among the most indebted in Nigeria, partly due to the relatively modest borrowing by past administrations.

However, the decision to take on debt has always been strategic, focusing on projects that promise tangible returns or address critical infrastructure needs.

Peter Obi’s Approach: Obi’s tenure was characterized by a significant aversion to borrowing.

He prioritized saving and careful expenditure, which often meant that the state avoided debt unless absolutely necessary.

His administration focused on improving the state’s IGR to reduce dependence on loans.

Willie Obiano’s Approach: Obiano’s government took a more balanced approach, recognizing that some borrowing was necessary to drive development.

The loans acquired were directed toward projects aimed at boosting the state’s economy, such as the airport project and other infrastructure initiatives.

Obiano’s administration was careful not to over-leverage the state, maintaining a manageable debt profile.

Comparison with Soludo ’s stance

Governor Chukwuma Soludo’s approach to borrowing represents a return to a more conservative fiscal stance, akin to that of Peter Obi.

Soludo will only consider borrowing for projects that are “bankable” and likely to generate returns sufficient to repay the debt.

This cautious approach contrasts with Willie Obiano’s flexible borrowing for strategic development projects.

Soludo’s stance is influenced by his background as an economist and former Central Bank Governor.

He gained a deep understanding of the implications of debt on long-term economic stability.

His refusal to borrow heavily, despite budget deficits, shows his commitment to fiscal discipline and avoiding debt pitfalls.

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