The Federal Government has drawn a clear line on public borrowing, cautioning subnational governments against taking loans without first meeting statutory requirements laid down by law.
Speaking at a financial management workshop in Kaduna, the Fiscal Responsibility Commission (FRC) stressed that any loan obtained by a state or local government without a Certificate of Proof of Compliance from the commission is unlawful and could expose the borrower to serious legal consequences.
The warning was delivered at the event attended by the 23 local government chairmen in Kaduna State, where the FRC used the platform to reinforce compliance with the Fiscal Responsibility Act, 2007.
The commission’s Director of Legal Services, Investigation and Enforcement, Charles Abana, who represented the Executive Chairman, Victor Muruako, explained that the law is explicit on borrowing procedures for government entities.
According to the commission, the Act does not allow states or local governments to contract loans to fund routine administrative or recurrent expenditures. Instead, borrowing is meant to support clearly defined and sustainable projects that contribute to development and can be justified within the legal framework.
The FRC urged local government officials to prioritise financial discipline and due process, noting that adherence to the Act would help strengthen transparency, accountability and long-term fiscal stability across all tiers of government.
