Abuja - In a move to ensure transparency, the Federal Government has barred banks from handing out loans to State Governments.
According to Naij, sources in the Ministry have revealed that Government is unhappy with the manner in which Governors took loans from banks and misused the funds, plunging states into perpetual debt.
As an alternative to taking out loans, Government has urged states to source funds from the capital market if they intend to embark on any infrastructural projects.
If Government's directive is followed, state Government's will source funds through bonds that are not only bankable but also released in tranches.
The move is set to increase transparency, increase public revenue, rationalize public expenditure while improving public fund management and sustainable debt management.
States that meet the requirements of the directive will then have access to a N50 billion facility to be guaranteed by the Federal Government, Vanguard reports.
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