The Senate on Thursday approved the Ogun State Development Policy Operation (DPO) loan of $350million from the World Bank.
The credit facility has an interest rate of 1.25 percent, moratorium of five years and a 25 year maturity tenor.
This is part of the 2016 to 2018 External Borrowing (Rolling) Plan of the Federal Government.
The approval of the loan facility followed Senate’s adoption of the report of the Committee on Local and Foreign Debts, chaired by Shehu Sani (APC, Kaduna State).
Presenting the report of the committee, Sani said the Ogun State Government met the various conditions by the World Bank to qualify for the loan.
According to him, the state has a low and acceptable debt sustainability level.
The senator explained that the facility will be used to finance key programmes of the state to stimulate internally generated revenue, develop critical infrastructure that will attract private investors to the state.
The World Bank Development Policy Operation (DPO) is a facility used to finance budget deficits in state’s annual budgets to enable them execute key projects.
“The Committee observed that: the Ogun State Government has put in place institutions framework for transparent and accountable budgetary and financial process.
“The various projects to be funded from the facility will engender economic growth; also increase revenue generation capacity of the State and create employment opportunities.
“That Ogun State Government has shown a high degree of prudence in implementing her annual budget,” the report read.
He said when fully implemented, the projects will boost the socio-economic development of the state.
In July this year, the upper legislative chamber had approved the foreign loan requests of Abia State ($200m), Ebonyi ($150m), Kano ($200m), joint request of Enugu, Kano, Plateau and Ondo ($200m) and another joint request of Enugu and Kano ($100m).
It however deferred the approval of the request of Kaduna, Katsina, Jigawa and Ogun states. No reason was stated rather, it was said that the approval would be done in phases.
With the approval of Ogun, the requests of Kaduna, Katsina and Jigawa states are still pending.
Besides receiving briefs from Federal and state government officials, the committee also relied on the following documents: Fiscal Responsibility Act, Debt Management Office Act, Debt Sustainability Analysis as well as the World Bank Implementation Completion and Results Report on Ogun State Development Policy Operation.