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Monday, 18 March 2019

News Africa: Osun, Lagos top chart of state that borrowed N2trn in 2017



Osun, Lagos top chart of state that borrowed N2trn in 2017

Osun State is leading the 35 other states of the federation in accumulating a N2 trillion debt more than the gross revenue they generated in the 2017 financial year, a report has shown.

The 36 states had a public debt profile that stood at N4.495 trillion but generated N2.099trn as gross revenue, representing 200 per cent of their debt figure in the year under review. Their net revenue however stood at N1.739trn.

The 2017 Annual Reports and Audited Accounts of the Fiscal Responsibility Commission (FRC) published recently showed that five states emerged the top debtors in 2017 considering their earned revenue.

According to the report, Osun State recorded the highest Debt-to-Net Statutory Revenue ratio with 1607.79m per cent. The state had a public debt of N168 billion but earned a Gross Statutory Revenue of N39.437bn after a deduction at source of N28.990bn, the net statutory revenue became N10. 436bn, the report indicated.

The deductions were largely for debt servicing on behalf of the state which represented 73.53 per cent of its total Gross Statutory Revenue of N39.437bn.

Clarifying the implication of the huge debt, the report indicated that out of every N100 due to Osun State as Gross Statutory revenue, only about N27 actually went to the coffers of the state government. This caused the abnormally high 1607.79 per cent Debt-to-Net Statutory Revenue.

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The next highest debt-revenue profile was for Lagos State which had a Debt-to-Net Statutory Revenue of 905.22 per cent. Lagos had a total public debt of N811.938bn, with Gross Statutory Revenue of N123.422bn. Its Net Statutory Revenue was N89.695bn after deductions for debt servicing.

Cross River came third on the highest Debt-Net Statutory of  754.88 per cent. It had a total public debt of N177.032bn, Gross statutory Revenue of N41.963bn and Net Statutory Revenue of N23.452bn.

Ekiti State had a Debt-to-Net Statutory Revenue of 551.54 per cent with a total public debt of N141.380bn. Its Gross Statutory Revenue was N37.754bn and Net Statutory Revenue was N25.633bn.

Ogun, Plateau and Oyo states followed with Debt-to-Net Statutory percentages of 532.40 per cent, 444.13 per cent and 354.68 per cent respectively.

Meanwhile, Anambra State had the least Debt-to-Net Statutory Revenue of 69.32 per cent followed by Yobe State with 89.93 per cent. Sokoto, Jigawa and Katsina states followed with 93.65 per cent, 96.15 per cent and 111.96 per cent respectively.

However under the Debt Management Office (DMO) revised guidelines on Public Debt Management, 2012, specifically Section F(C) of the guidelines, the total amount of loans outstanding at any particular time including the proposed loan shall not exceed 50 per cent of the actual revenue of the body concerned for the preceding 12 months.

Accordingly, states whose proportion of Debt-to-Revenue exceeds 50 per cent are assumed to have violated Section F(C) of DMO 2012 Debt Management Guidelines.

The commission further noted that it will be illegal, wrong to conclude that such states have over borrowed as the overall debt limits for government have not been set. Daily Trust

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