Some financial experts have called for the domestication of State debt law would help in managing State finances and boost its economy.
A financial Consultant at L.A Konsult, Mrs Lolade Adesola said that domestication of debt law was very important, crucial and critical to state buoyancy.
“In fact, it is not only the debt law that should be domesticated because there are so many laws that are at the federal level that state governments need to domesticate, such as Child labour, domestic violence, rape, minimum wage and other laws.
“But in particular this debt law is very important because it would help the present governors and future ones to know how to behave themselves in managing state finances.
“There are so many of them that are so reckless, they take debt they can not be able to repay.
“And some banks are not so prudent as they should be; they are not doing their due diligence, they are lending to them.
“So that at the end of the day, the state government has no money to meet normal State recurrent expenditures talkless of capital expenditure,” she said.
Adesola added that after its domestication then they would now be guided by those laws in taking loans and going to the stock market to issue bonds and so on.
She further said it was also important even at local governments level for debt law to be domesticated and also at various government agencies.
“This law should be in place to guide them and also to guide present and future administrators in all levels of government,” Adesola said.
Speaking on the implications, another financial expert, Mr Sola Famakinwa said that the effect of debt portfolio on the economic growth has a long run regression results.
“This shows that domestic debt, external debt service, inflation rate and foreign direct investment have negative relationship with the growth variables.
“Increase in the domestic debt by government translates to the decrease in the production of goods and services especially in a situation where such debt is used for recurrent expenditure.
“External debt service denote capital flight from the nations , inflation rate means that the cost of goods and services will reduce the purchasing power, as well as affecting the global competitiveness of Nigerian products negatively.
“External debt comes with the obligation of debt servicing, which translates to reduction in the finance meant for developmental purpose.
“On the other hand if external debt is put to productive use, the returns far outweighs the cost,” Famakinwa noted.