The House of Representatives has said it will not be lured into supporting the deceptive plot orchestrated by some people to lure the Asset Management Corporation of Nigeria (AMCON) to purchase new debts from Deposit Money Banks (DMBs) in the country.
The Chairman, House of Representatives Committee on Banking and Currency, Hon. Jones Onyereri (PDP, Imo state) made this known in Enugu.
Onyereri, who addressed his colleagues at the opening of a retreat for lawmakers, argued that it would not be the right decision for the country considering the state of the economy, which is on the pathway to recovery after sliding into recession.
We are also aware that some economists are clamouring for AMCON to buy more toxic assets from the Eligible Financial Institutions (EFIs) in view of the very high level of the non-performing loans that are worse than the 2009 experience and far above the regulatory threshold.
We wish to sound a note of warning that this committee will not; I repeat will not support any such move. At least not at a time like this in the history of our economy.
“These legal and institutional bottlenecks arise from lack of co-operation from EFIs, issues relating to clawback on EFIs and intervened banks, wrong interpretation of the AMCON Act, which has led to conflicting decisions by the courts especially where it relates to possessory and freezing orders and disingenuous acts of the obligors, who exploit our court processes and the shortcomings in the extant statute to frustrate the efforts of the corporation in recovering the loans from obligors.
The MD/CEO of AMCON, Ahmed Kuru, said its total debt obligation of N4.6 trillion represents 75 percent of the 2016 national budget.
To put this into perspective, AMCON’s total debt obligation of N4.6 trillion represents 75 percent of the 2016 national budget, 26 percent of the 2016 total national debt, and 5 percent of the country’s nominal gross domestic product in 2016.
Given the current demands on the federal government, it is doubtful that it can afford to expense AMCON’s debt in the short term.
Kuru lamented that the ramifications for failure by AMCON to recover its debt, principally owed to the Central Bank of Nigeria (CBN), could not be quantified as it was beyond economic cost.
He said in the last two years, AMCON’s debt repayment to the CBN was N456.4 billion and N517.7 billion but actual payments were N256.7 billion and N191.1 billion in 2015 and 2016, respectively.