By Yinka Kolawole
13 States in Nigeria could have turn out to be technically bancrupt as an unbiased analysis report indicated they failed fiscal sustainability check.
In accordance with the analysis performed by BudgIT, a public sector-focused monetary data home, the states’ revenues couldn’t fund their recurrent expenditure obligations along with their mortgage compensation schedules due in 2019.
Within the simply launched 2020 version of its annual state of states report titled, “Fiscal Sustainability and Epidemic Preparedness Financing on the State Stage”, BudgIT famous that Rivers State ranked first on the 2020 States’ Fiscal Sustainability Index, adopted by Anambra and Ogun states.
It added that among the many states that aren’t fiscally sustainable, Lagos, Osun, Oyo, Kogi, Ekiti and Plateau states occupy the worst positions.
It acknowledged: “From our 2020 State of States evaluation, 13 states had been unable to fund their recurrent expenditure obligations along with their mortgage compensation schedules due in 2019 with their respective complete revenues.
“The worst hit of those 13 states are – Lagos, Oyo, Kogi, Osun and Ekiti states whereas the opposite states on this pendulum are Plateau, Adamawa, Bauchi, Gombe, Cross River, Benue, Taraba and Abia.
“Moreover, of the remaining 23 states that may meet recurrent expenditure and mortgage compensation schedules with their complete income, eight of these states had actually low (lower than N6 billion) extra income, that they needed to borrow closely to fund their capital tasks.
“The worst hit are Zamfara, Ondo and Kwara who had N782.45 million, N788.22 million and N1.48 billion left, respectively.
“Primarily based on their fiscal evaluation, solely 5 states – Rivers, Kaduna, Akwa Ibom, Ebonyi and Kebbi states – prioritised capital expenditure over recurrent obligations, whereas 31 states prioritised recurrent expenditure based on their 2019 monetary statements.”
The report additional famous that every one 36 states’ money owed surged by 162.87% (N3.34 trillion), from N2.05 trillion in 2014 to N5.39 trillion in 2019, with 10 states accounting for about half or N1.68 trillion of this enhance. Seven of those states are from the South whereas three are from the North.
To realize fiscal sustainability, Damilola Ogundipe, BudgIT’s Communications Lead, stated: “States have to develop their Internally Generated Income, IGR, as choices for borrowing are decreased because of debt ceilings put in place by the Federal Authorities to stop states from slipping into debt disaster. There must be a shift from the tradition of states’ overdependence on Federation Account Allocation Fee, FAAC.”
Commenting, BudgIT’s Principal Lead, Gabriel Okeowo, famous that although some states have seen some enchancment of their IGR between 2014 and 2019, there’s nonetheless a have to put programs in place for aggressive IGR development inside the sub-national economies.
He added that this extra in order falling crude oil costs, OPEC manufacturing cuts and different COVID-19 induced headwinds are set to affect Federal Allocations over the subsequent two years.