…Lagos, Cross River biggest violators
BY VICTORIA ONU, ABUJA
The huge appetite for borrowing and inability to boost Internally Generated Revenue has forced the entire 36 states of the federation and the Federal Capital Territory into surpassing the Federal Government’s 50 per cent debt to revenue ratio limit.
This is based on a report prepared by the Fiscal Responsibility Commission, which analysed the sustainability of the public debt for the 2020 fiscal period.
The Debt Management Office Revised Guideline on Public Debt Management of 2012 sets out the rules for public debt assessment in Nigeria.
Section F(C) of the Guidelines provided that the total amount of loans outstanding at any particular time, including the proposed loan, must not exceed 50 per cent of the actual revenue of the state concerned, for the preceding 12 months.
But based on analysis of the Fiscal Responsibility Commission Report, all the 36 states and the FCT are in breach of this provision.
Based on the analysis, Lagos State emerged the biggest violator of the provision with a total debt to revenue ratio of 901.08 per cent, followed by Cross River, with 718.99 per cent, and Osun, 571.54 per cent.
While Lagos State has a total debt of N1.04trn, its total revenue as of 2020 was just about N115.93bn.
“The aim is to ensure that the debt of states remains sustainable. Governments at all levels must borrow only for capital expenditure and human capital development
“
For Cross River and Osun, their revenues were N32.89bn and N30.62bn while their debts were put at N2356.49bn and N175.04bn respectively.
Further analysis showed that Abia’s debt to total revenue ratio was 260.53 per cent, Adamawa, 293.24 per cent; Akwa Ibom, 170.28 per cent; Anambra, 198.67 per cent; Bauchi, 313.81 per cent; Bayelsa, 144.43 per cent; Benue, 293.37 per cent; Borno, 161.40 per cent; and Delta, 718.98 per cent.
Ebonyi violated the debt to revenue ratio by 151.72 per cent, Edo, 321.17 per cent; Ekiti, 313.69 per cent; Enugu, 231.37 per cent; Gombe, 396.51 per cent; Imo, 335.25 per cent; Jigawa, 75.84 per cent; Kaduna, 451.42 per cent; Kano, 175.96 per cent; Katsina, 113.10 per cent; Kebbi, 143.46 per cent; Kogi, 159.22 per cent; and Kwara 193.76 per cent.
Others are Nasarawa, 189.57 per cent; Niger, 171.91 per cent; Ogun, 512 per cent; Ondo, 231.45 per cent; Oyo, 235.51 per cent; Plateau, 427.08 per cent; Rivers, 215.16 per cent; Sokoto, 104.69 per cent; Taraba, 260.05 per cent; Yobe, 131 per cent; Zamfara, 265.99 per cent; and FCT, 120.78 per cent.
The report stated, “A vital aspect of the Commission’s mandate is to monitor the borrowing and indebtedness of the three tiers of government in the Federation.
“The aim is to ensure that debt of states remain sustainable. Government at all levels must borrow only for capital expenditure and human capital development.”
The report urged states to cut down on borrowing by looking for alternative ways to boost revenue.
It also called on state governments to properly negotiate interest rate on loans to a minimal level so as to reduce the huge amount spent on debt servicing.
