•Lagos has reduced reliance on FAAC to 21%, says Sanwo-OluWith a total debt burden of N5.39 trillion as at the end of December 2019, the 36 states of the federation are no longer eligible to borrow from the capital market, a new report, has said.
The report added that the states are no longer qualified to borrow from the capital market as a result of the regulation put in place by Debt Management Office to forestall debt crisis on sub-national public borrowings. The BudgIT Research Lead, Mr. Abel Akeni, who reviewed the report, said that in the light of this debt growth, all the state governments have reached the ceiling set for them by the DMO, which stipulated that state government’s total debt must not be more than 50 per cent of its last year’s total revenue.
It noted that just by devaluing the exchange rate of the Naira to the Dollar from N305 in January to N380 in September, the Lagos State’s foreign debt obligations have ballooned. The report stated that only 15 states in the country are in a good position to meet their recurrent expenditures and loan repayment obligations from their total revenues.Others are Enugu, Kebbi, Borno, Katsina, Yobe, Imo and Bayelsa State.
Akeni noted that recurrent expenditures, though not necessarily bad, could hamper the ability of a state to generate future revenues to invest in development projects, adding that some states used recurrent expenditures to prioritise certain items. For instance, Delta State has a miscellaneous budget of N33 billion under its recurrent items.
The Lagos State Governor, Sanwo-Olu, who was the guest of honour at the unveiling of the report, in his keynote address said that the state’s reliance on FAAC has gone down to only 21 per cent as at August 2020. Meanwhile, the Osun state government has declared that it is not in any way overwhelmed by the huge debt profile facing the state, stressing that alternative means had been identified to meet the financial needs of the state of the living spring.