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 report said, “The Debt Management Office Revised Guidelines on Public Debt Management, 2012 sets out the rules for public debt assessment in Nigeria.

“Section F(C) of the Guidelines states that 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.”

On the debt status of the states, the report said, “It can be deduced that all the 36 states and FCT exceeded the DMO threshold of 50 per cent.

“Lagos State accounted for the highest Debt-to-Total Net Revenue as at the end of 2019, with 712.94 per cent. Osun State came second with 650.94 per cent Debt-to-Total Net Revenue. While Cross River and Ogun States were third and fourth with 597.36 per cent and 402.30 per cent respectively.”

The report said the revenue and debt situation of the states, however, were not enough to say that the states had over borrowed since the president of the country has not set the borrowing limits for the subnational governments as required by the FRC Act 2007.

It said, “Nonetheless, this does not lead to the conclusion that such states have over-borrowed, as the overall debt limits of the governments in the federation has not been set.

“It is on record that the overall limits of consolidated debts of federal, states and local governments are yet to be set since the enactment of the Fiscal Responsibility Act, 2007, though the commission has continually engaged the Honourable Minister(s) of Finance, Budget and National Planning on the issue.”

In the absence of predetermined limits set for the subnational government, the FRC uses the limit set by the DMO to determine the level of indebtedness of the states.

This rule says that the debts of the states should never be higher than 50 per cent their revenues in the preceding 12 months.

Given the difficulty in determining the Internally Generated Revenues of the states and negligibility of the IGRs for most of the states (except Lagos), the FRC uses revenues collected by the states from the federation account for its calculations.

Thus, Lagos with a public debt of N899,385,238,387.44 and a revenue of N117,883,619,963.71 had a debt to revenue ratio of 762.94 per cent. It therefore exceeded the 50 per cent rule by 712.94 per cent.

For Osun, the public debt stood at N169,784,799,861.33 while the revenue stood at N24,222,272,968.41. This puts the debt to revenue ratio at 700.94 per cent. It therefore exceeded the 50 per cent rule by 650.94 per cent.

Cross River’s debt stood at N235,074,694,644.56 while its revenue stood at N36,312,879,237.96. Its debt to revenue ratio stood at 647.36 per cent and therefore exceeded the 50 per cent rule by 597.36 per cent.

Ogun, on the other hand, had a debt of N175,087,821,320.28 and a revenue of N38,710,634,518.42. Its debt to revenue ratio stood at 452.30 per cent. This means that it exceeded the 50 per cent rule by 402.30 per cent.

States with the least excess debt ratio included Sokoto, Delta and Bayelsa.

Sokoto had a debt profile of N60,035,240,351.37, a revenue profile of N55,476,385,825.95 and a debt to revenue ratio of 108.22 per cent. Its excess was therefore put at 58.22 per cent.

Delta had a debt profile of N254,277,286,064.46, a revenue profile of N219,282,893,930.69 and debt to revenue ratio of 115.96 per cent of 65.96 per cent.

Bayelsa, on the other hand, had a debt profile of N167,343,157,583.65, a revenue profile of N140,129,363,936.73 and a debt to revenue ratio of 119.42 per cent. It therefore exceeded the 50 per cent rule by 69.42 per cent.

The Lagos State Commissioner for Information and Strategy, Mr Gbenga Omotosho, promised to respond to an enquiry from our correspondent on the debt status of the state. He had yet to do so as of the time of filing this report.

Also, efforts to get Osun state government to respond to enquiries by our correspondent failed as Dr Tunde Adejumo, the DG, Osun Debt Management Office, could not be reached on his mobile line.

Also, a text message sent to him had not been responded to as of the time of filing this report

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https://m.punchng.com/Debts-exceeded-revenues-in-Lagos-Cross-River-FCT-others-FRC

We can't just shake off these debts

They use the country's revenue to share among themselves and cronies, and will further go an borrow to run capital projects, pay salaries, offset debts that they are still accumulating.

What a country, even the experts can't tell them off cos they are benefiting from the act

Yet they loot like their lives depend on it..

This is getting very interesting by the day so Lagos, Osun, Cross River and Ogun are now facing insolvency . 3 South west Core states are now stewing in debts with very high and impossible debt to revenue ratios

There's the IGr, I smell it just can't see or feel it.

People don’t understand that people without business mind can’t control affairs of a state properly
Spending more than you earn is called bankruptcy
A state can earn 1 billion
Another earn 3million
And the later will develop more than the former

Hmm
Who is milking lagos

Ogun no suppose dey d list at all na all d money wey dem borrow dem loot dem no even use small inside du road....

Lagos debt status is quite understandable, at the end, the investments in the eko Atlantic city, lekki free trade zone and Dangote refinery would spike up revenue in the state.
.

What I don't understand is what Osun state is looking for in number two.
That state should have declared bankruptcy by now, with the way things are going, their debts would go higher than Lagos with no feasible plan of repaying and not much economic activity going on.
.

I can't remember when I even read a news piece from the state. It appears the current governor Oyetola who was thought to bring succor due to his economic background is just sitting around, borrowing money and paying salaries.

Okay

We need more debts for capital projects, Google the debt profile of USA & see wonders.
All that matters is that those debts are used judiciously for infrastructural development of the state. Debts & state growths are 5 & 6.

Corruption

Debts incurred for long term infrastructures makes sense but to borrow on a regular basis to pay salaries and fund security votes of governors is a no-no for me.
In Lagos, we have a few landmark large-scale public infrastructures that are being funded with debt. I have a feeling that some of these projects are denominated in foreign currency thereby causing the cost to rise as naira falls.
Most importantly, government need to price it's project well because it seems some of our price variation with same projects elsewhere always makes ours far more pricey making me to wonder.visit www.freestuffsng.com for latest freestuffs in Nigeria. God bless Nigeria.

They should keep borrowing.

adenigga:
.
The Lagos State Commissioner for Information and Strategy, Mr Gbenga Omotosho, promised to respond to an enquiry from our correspondent on the debt status of the state. He had yet to do so as of the time of filing this report.

Also, efforts to get Osun state government to respond to enquiries by our correspondent failed as Dr Tunde Adejumo, the DG, Osun Debt Management Office, could not be reached on his mobile line.

Also, a text message sent to him had not been responded to as of the time of filing this report

Now, they are nowhere to seen to explain.

Noted

Luckydubby7:
Hmm
Who is milking lagos

j.a.g.a.b.a.n!!!!

USA has debt to revenue of 700 percent, same with other developed countries.

The right metric is debt service to revenue. If you can service your debt close to two times in one year especially in a low interest rate environment, no qualms at all.

Of course, judicious use of debt is encouraged.

Gej is at fault

Someone have to leave Lagos alone pls.
I don't want to mention name.

Patrioticman007:
We need more debts for capital projects, Google the debt profile of USA & see wonders.
All that matters is that those debts are used judiciously for infrastructural development of the state. Debts & state growths are 5 & 6.

swear by Ogun or Sango that Lagos and Ogun are utilising their debts judiciously

Reality

Debt is bad

Nigeriabiafra82:
People don’t understand that people without business mind can’t control affairs of a state properly
Spending more than you earn is called bankruptcy
A state can earn 1 billion
Another earn 3million
And the later will develop more than the former

That's why we have an accountant-General in every state.

Patrioticman007:
We need more debts for capital projects, Google the debt profile of USA & see wonders.
All that matters is that those debts are used judiciously for infrastructural development of the state. Debts & state growths are 5 & 6.

What's osun and ogun state using theirs for

No new thing heee

adenigga:


j.a.g.a.b.a.n!!!!

The two of you should get out of this thread. Let economist and reasonable people comment.

What do you expect when thiefs are in charge of the treasury.

Patrioticman007:
We need more debts for capital projects, Google the debt profile of USA & see wonders.
All that matters is that those debts are used judiciously for infrastructural development of the state. Debts & state growths are 5 & 6.

They won't like your post... if not for the little we dey make those guys in office dey share am it would have gone a little