State governments may be forced to increase taxes to be able pay salaries and carry out projects in their domains, financial experts have said.
Speaking on the recent announcement that states will soon commence repayment of the loan, a forensic accountant and financial analyst, Mathew Ogagavworia said, “these monies were not grant’s, they were loans. It would be reckless if the federal government does not demand for the repayment.”
He said there is never a bad time to do a good thing.
“Tomorrow if the states say they want bailout, they will need to think it through and confer properly with their respective assemblies,” he added.
He argued that the worst that may happen is states resorting to increasing taxes to meet their obligations. If that happens, he says, citizens will begin to question state governments’ arbitrarilly borrowing.
“So I think it is in order. If states are challenged, they can send a repayment plan to the federal government stating what will be convenient.
“If the federal government forgives that kind of amount, it will give room to more recklessness because we currently practice a feeding bottle federalism,” he said.
The Managing Director/Chief Executive Officer of Enterprise Capital Partners Ltd, Rotimi Fakayejo said: “I think the federal government believes that something has gone wrong with the management of that fund and it doesn’t have the power to scrutinize the states.
He said there is no possibility to recover that money en bloc.
He argued that recovering at once would be double punishment for the people of the states because the salaries for which the bailout were collected were not paid and they may not be able to get their salaries if that went through.
Fakayejo said: “I think the culprits should be brought to book but where they are governors still in office, then nothing can be done because they enjoy immunity.
“I don’t think now is the right time, at the same time, there will never be a right time. This kind of bailout was not necessary in the first place.”