Debts Exceeded Revenues In Lagos, Cross River, FCT And Others - FRC Reveals
The debts of four states exceeded their net revenues by more than 400 per cent, the Fiscal Responsibility Commission has said. The states are Lagos, Osun, Cross River and Ogun.
The FRC in its report ‘Debt sustainability analysis of state governments’ for 2019 also showed that the debts of all the 36 states and the Federal Capital Territory Administration exceeded 50 per cent of their revenues, contrary to limits set by the Debt Management Office.
The report contained in the 2019 Annual Report of the FRC obtained by our correspondent on Monday said states that had ‘the proportion of Debt-to-Revenue above 50 per cent are assumed to have violated Section F(C) of Debt Management Guidelines, 2012’.
The FRC file stated, “The Debt Management Office Revised Guidelines on Public Debt Management, 2012 sets out the regulations for public debt evaluation in Nigeria.
“Section F(C) of the Guidelines states that the whole amount of loans great at any unique time including the proposed mortgage shall no longer exceed 50 in step with cent of the actual revenue of the frame concerned, for the previous three hundred and sixty five days.”
On the debt repute of the states, the file said, “It can be deduced that every one the 36 states and FCT exceeded the DMO threshold of 50 according to cent.
“Lagos State accounted for the highest Debt-to-Total Net Revenue as at the end of 2019, with 712.Ninety four in step with cent. Osun State got here 2d with 650.94 in keeping with cent Debt-to-Total Net Revenue. While Cross River and Ogun States were 1/3 and fourth with 597.36 in line with cent and 402.30 in line with cent respectively.”
The document said the sales and debt situation of the states, however, were now not sufficient to mention that the states had over borrowed for the reason that president of the us of a has now not set the borrowing limits for the subnational governments as required with the aid of the FRC Act 2007.
It said, “Nonetheless, this doesn't lead to the realization that such states have over-borrowed, as the overall debt limits of the governments inside the federation has not been set.
“It is on record that the general limits of consolidated money owed of federal, states and neighborhood governments are yet to be set since the enactment of the Fiscal Responsibility Act, 2007, although the fee has continually engaged the Honourable Minister(s) of Finance, Budget and National Planning on the problem.”
In the absence of predetermined limits set for the subnational government, the FRC makes use of the restrict set through the DMO to decide the extent of indebtedness of the states.
This rule says that the money owed of the states should by no means be better than 50 in keeping with cent their sales in the preceding one year.
Given the difficulty in figuring out the Internally Generated Revenues of the states and negligibility of the IGRs for maximum of the states (except Lagos), the FRC uses sales gathered by the states from the federation account for its calculations.
Thus, Lagos with a public debt of N899,385,238,387.Forty four and a sales of N117,883,619,963.Seventy one had a debt to sales ratio of 762.94 in keeping with cent. It therefore surpassed the 50 in step with cent rule by way of 712.Ninety four according to cent.
For Osun, the general public debt stood at N169,784,799,861.33 at the same time as the revenue stood at N24,222,272,968.Forty one. This places the debt to sales ratio at seven hundred.Ninety four per cent. It therefore surpassed the 50 per cent rule by means of 650.Ninety four consistent with cent.
Cross River’s debt stood at N235,074,694,644.Fifty six even as its sales stood at N36,312,879,237.Ninety six. Its debt to sales ratio stood at 647.36 consistent with cent and therefore handed the 50 in step with cent rule by way of 597.36 per cent.
Ogun, then again, had a debt of N175,087,821,320.28 and a sales of N38,710,634,518.42. Its debt to revenue ratio stood at 452.30 consistent with cent. This way that it passed the 50 in step with cent rule with the aid of 402.30 in keeping with cent.
States with the least excess debt ratio blanketed Sokoto, Delta and Bayelsa.
Sokoto had a debt profile of N60,0.5,240,351.37, a sales profile of N55,476,385,825.Ninety five and a debt to revenue ratio of 108.22 per cent. Its excess become consequently positioned at 58.22 according to cent.
Delta had a debt profile of N254,277,286,064.46, a sales profile of N219,282,893,930.69 and debt to sales ratio of one hundred fifteen.96 in keeping with cent of 65.Ninety six in step with cent.
Bayelsa, on the other hand, had a debt profile of N167,343,157,583.Sixty five, a revenue profile of N140,129,363,936.73 and a debt to revenue ratio of 119.42 consistent with cent. It consequently exceeded the 50 in step with cent rule by way of sixty nine.Forty two in keeping with cent.
The Lagos State Commissioner for Information and Strategy, Mr Gbenga Omotosho, promised to reply to an enquiry from our correspondent at the debt repute of the state. He had but to achieve this as of the time of submitting this document.
Also, efforts to get Osun kingdom authorities to respond to enquiries through our correspondent failed as Dr Tunde Adejumo, the DG, Osun Debt Management Office, could not be reached on his cell line.
Also, a textual content message sent to him had not been answered to as of the time of filing this record[NewsNaira]