Commissioner for Information, Mr. Kayode Akinmade
Nine
states of the federation are in serious debts judging by their revenue
profile, the Fiscal Responsibility Commission has said.
The states are: Lagos, Ekiti, Kaduna, Cross Rivers, Ondo, Edo, Bayelsa, Ebonyi and Kwara.
In its Annual Report and Audited
Accounts 2011, which was released in Abuja on Thursday, the FRC listed
the nine states as being under the weight of huge debts.
The FRC also raised the alarm that given
the rate of growth of the national debt and debt servicing, the
nation’s debt was unsustainable except action was taken to reduce the
rate of growth or increase the Gross Domestic Product growth rate.
According to the report, the total
indebtedness of each of the states as of December 31, 2011 was beyond
the limit set by the Debt Management Office.
The DMO had said that states’
indebtedness should never rise more than 50 per cent of their annual
revenues in the previous 12 months, while the nation’s total
indebtedness should not be more than 40 per cent of the GDP.
For each of the nine states, however,
the total indebtedness as of December 31, 2011 was more than 50 per cent
of their revenue profile.
For Lagos State, the debt to revenue
ratio stood at 155.4 per cent, with the annual statutory revenue
standing at N125.48bn and a debt profile of N193.44bn.
On a revenue profile of N44.97bn and a
debt profile of N35.98bn, Ekiti State’s ratio stood at 80 per cent.
Kaduna had a revenue profile of N63.94bn, debt profile of N40.08bn and
debt to revenue ratio of 62.68 per cent.
For Cross River State, the ratio stood at 61.44 per cent on a revenue of N56.92bn and a debt of N34.97bn.
The ratios for Edo, Ondo, Bayelsa,
Ebonyi and Kwara states stood at 56.03 per cent, 55.12 per cent, 54.5
per cent, 51.85 per cent, and 51.75 per cent, respectively.
Four other states whose debt to revenue
ratio exceeded the states’ average of 36.36 per cent are Imo, 49.4 per
cent; Ogun, 45.45 per cent; Bauchi, 41.97 per cent; and Osun, 36.52 per
cent.
The least indebted states by the debt to
revenue ratio include Rivers, 2.02 per cent; Borno, 3.28 per cent; Akwa
Ibom, 3.88 per cent; Taraba, 6.79 per cent; Plateau, 8.02 per cent; and
Adamawa, 8.72 per cent.
The FRC said the debt profile included
external debts; money borrowed from banks and the capital market, but
excluded debts owed to contractors, which could not be ascertained.
The FRC explained, “Only statutory
revenue is used in the analysis because the states refused to supply
data on their IGR. In any case, the IGR is not more than eight per cent
of the states’ total except Lagos, which also refused to furnish its
IGR. In essence, the omission of the IGR may not distort the result of
the analysis.
“It is also pertinent to observe that
the non-inclusion of the outstanding debt owed to contractors and
contingent liabilities may more than offset the omission of the IGR.
“The Federal Government owes 111.63 per
cent of its statutory revenue. In terms of debt to GDP ratio, the
Federal Government debt stock is about 14.5 per cent. The national debt
of N8.29tn is, however, about 22.1 per cent of the GDP. This is higher
than the publicised figure of 17.5 per cent.
“At present, Nigeria’s GDP is growing at
7.45 per cent. The stock of debt is growing at approximately 23.75 per
cent, while debt service is growing at 26.81 per cent.
“In a situation in which the growth
rates of debt and debt service outstrip the growth rates of revenue and
GDP, it is safe to say that debt is hardly sustainable, unless the rates
of growth and GDP are stepped up and the rate of borrowing is reduced
or held constant.”
For the Federal Government and its
agencies, the statutory revenue stood at N5.54tn; while the debt stock
stood at N6.19tn, thereby taking the debt to revenue ratio to 111.63 per
cent. The entire country had a debt to revenue ratio of 85.38 per cent
as of December 2011.
However, the Commissioner for Finance,
Lagos State, Mr. Ayo Gbeleyi, said he was not aware of the FRC report,
but noted that the state’s revenue and expenditure profiles were
available for free on the government’s official website.
His counterpart in Ekiti State, Mr. Dapo
Kolawole, said the claim by the FRC that the state was among the most
indebted in the country was false.
Kolawole said, “The information is false
and the data is wrong. Ekiti is one of the most efficient states in the
country. In terms of financial management, we are very efficient and
prudent.
“What I am saying is that it is
embarrassing for somebody sitting somewhere in Abuja to tell me that
Ekiti is one of the states that over-borrowed without crosschecking.
What is the basis of statistics and how much have we borrowed compared
with the state’s GDP?”
Similarly, the Ondo State Government said the report did not capture the present state of things in the state.
The Commissioner for Information, Mr. Kayode Akinmade, said things were now different from 2011, the year covered by the report.
He said, “Going by the date of the
report, this could not have been the latest status of Ondo State’s debt
profile because this was 2011 report.
“However, from time to time, we go to
look for finance from the money and capital markets. Every state carries
some debt profile, ours is very sustainable, our debt to revenue ratio
is below 20 per cent.”
