Court orders FG to set borrowing limits for states, councils

Honourable Justice G.O. Kolawole of the Federal High Court has ordered President Muhammadu Buhari, in compliance with section 42 (1) of the Fiscal Responsibility Act, to set the limits of the consolidated debt of Federal, State and Local governments.By this, each of the three-tier government will be bound by the limit given their respective ability and check reckless borrowings, as well as accumulation of obligations for successive governments, particularly at the state level.

The order came in Suit No. FHC/ABJ/CS/302/2013 between the Centre for Social Justice Limited by Guarantee (CSJ) against five Defendants- the President of the Federal Republic of Nigeria, the Senate of the Federal Republic of Nigeria, the House of Representatives of the Federal Republic of Nigeria, the Minister of Finance and the Attorney General of the Federation and Minister of Justice, who are the first to the fifth Defendants respectively.

CSJ, led by its Lead Director, Eze Onyekpere, through an Originating Summons, had posed two questions for determination- Whether the Respondents have constitutional and statutory obligations to set and enforce the overall limits for the amounts of consolidated debt of the Federal, State and Local governments in Nigeria.

Also, whether the Honourable Court can compel the Defendants to set and enforce the overall limits for the amounts of consolidated debt of the Federal, State and Local Governments in Nigeria pursuant to Section 42 (1) of the Fiscal Responsibility Act, 2007.CSJ therefore, sought the court to declare that the first Defendant’s continued refusal to set the overall limits for the amounts of consolidated debt of the Federal, State and Local Governments in Nigeria constitutes a violation of section 42 (1) of the Fiscal Responsibility Act 2007.

That a declaration that the first Defendant’s refusal to set the overall limits for the amounts of consolidated debt of the Federal, State and Local Governments in Nigeria constitutes a flagrant violation of section 5 (1) (b) of the Constitution of the Federal Republic of Nigeria.That a Declaration that the fourth Defendant’s continued failure, refusal or neglect to advise the first Defendant on the appropriate overall limits to be set for the amounts of consolidated debt of the Federal, State and Local Governments in Nigeria constitutes a violation of section 42 (1) of the Fiscal Responsibility Act 2007.

Also, an order directing the five Respondents to ensure that the overall limits for the amounts of consolidated debt of the Federal, State and Local Governments in Nigeria is set, approved and enforced in line with Section 42 (1) of the Fiscal Responsibility Act 2007.”The Defendants however, pleaded that compliance with the provision of Section 42 (1) of the Fiscal Responsibility Act will be difficult and it is a process that takes a lot of time as it will involve the computation of the Gross Domestic Product of States and the reconstruction of their domestic debt data.

The Defendants also raised other technical issues including the fact that this limitation should have been set by the Defendants within 90 days of the commencement of the Fiscal Responsibility Act on July 30, 2007, arguing that the cause of action had lapsed and the fact that President Muhammadu Buhari was not the President at the time of the commencement of the Act weighed against the action now.

The Court, led by Justice Kolawole, after listening to the parties, said: “Having regard to the answers given to the two questions based on my interpretation of the provision of section 42 (1) of the Fiscal Responsibility Act, supra, that it is mandatory, it is my decision that the reliefs being sought ought to succeed, and they are granted as pleaded.

“In relation to relief (4) in the Plaintiff’s “Originating Summons”, in the exercise of my inherent jurisdiction pursuant to the provision of Order 56 Rule 1 of the Federal High Court (Civil Procedure) Rules, 2009, the first and fourth Defendants shall within 90 days from today, comply with and execute the provision of Section 42 (1) of the Fiscal Responsibility Act, 2007.

“In the event that they were unable to conclude with the process which the 1st and 5th Defendants’ counsel has argued was already on its way within the said period, the first and fourth Defendants shall be at liberty through the fifth Defendant to apply to a Court of competent jurisdiction to extend the period within which the mandatory provision of Section 42 (1) of the Fiscal Responsibility Act, supra can be fully complied by a presentation made by the first Defendant on the advice of the fourth Defendant to the 2nd and 3rd Defendants.

“The Plaintiff who is enabled by the provision of Section 51 of the Act, ought to be commended as its action was intended to jolt the 1st, 4th and 5th Defendants to do that which is necessary in order to give the Federal Government of Nigeria’s current policy on anti-corruption a necessary boost within the ambits of the law which has largely been obeyed by refusal of successive administration to execute the provision in Section 42 (1) of the Fiscal Responsibility Act, supra.

“There shall be no order as to costs, each party shall bear its own costs. This shall be the Judgement of this court which I reserved after I listened to the re-adoption of the addresses filed and exchanged by the 1st and 5th Defendants on 15/2/18”.Meanwhile, CSJ said it is awaiting the Defendants’ compliance with the court order and expressed appreciation to their counsels Kalu Onuoha and Kingsley Nnajiaka for diligently following through this suit.