The Fiscal Responsibility Commission (FRC) disclosed that as of 2019 end, Lagos State led the 36 states in the country in debt-to-total net revenue, soaring as high as 712.94 percent.
This was disclosed in the FRC’s report titled, ‘Debt sustainability analysis of state governments’, stating that all states’ debts including the Federal Capital Territory surpassed 50 percent of their revenues.
In the report, the FRC noted that the Debt Management Office (DMO) had laid down guidelines on public debt management in 2012 for public debt assessment in Nigeria.
“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,” the report read.
The report added that states like Osun, Cross River, and Ogun came in second, third, and fourth in the debt-to-total net revenue.
It 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.”
What These Debts Mean For States
The report stated that although the above-listed states had exceeded their debt-to-total net revenue, it doesn’t lead to the conclusion that they have “overborrowed”.
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.”
A further breakdown of states’ debts
- Revenue: N117,883,619,963.71,
- Debt: N899,385,238,387.44
- Debt-debt-to-total net revenue %: 762.94, which is 712.94 percent higher than the 50 percent set standard.
- Revenue: N24,222,272,968.41
- Debt: N169,784,799,861.33
- Debt-to-total net revenue%: 700.94 percent, which is 650.94 percent higher than 50 percent set standard.
- Revenue: N36,312,879,237.96
- Debt: N235,074,694,644.56
- Debt-to-total net revenue%: 647 percent, which is 597 percent higher.
- Revenue: N38,710,634,518.42
- Debt: N175,087,821,320.28
- Debt-to-total net revenue%: 452.30 percent, which is 402.30 percent higher than 50 percent set standard.