Targets 100 per cent performance for Y2020 budget
By Emeka Anaeto and Olasunkanmi Akoni
In spite of the increasing budgetary provision which has risen to N1.168 trillion for the year 2020, Lagos State Government debt profile presently stands at N39.692 billion.
Commissioner for Finance, Mr Rabiu Olowo and his Economic Planning and Budget, Mr Sam Egube, disclosed this on Tuesday, during an inter-ministerial media briefing breakdown analysis on Y2020 Appropriation Law, tagged: “Awakening,” held in Alausa, Ikeja.
Recall Nigerian States and Federal Debt Stock data as at 31st December 2018 reflected that the country’s foreign and domestic debts stood at $25.27bn and N16.63trn respectively.
Further disaggregation of Nigeria’s foreign debt showed that $11.01bn of the debt was multilateral; $344.63m was bilateral (AFD) and another $2.75bn bilateral from the Exim Bank of China, JICA, India and KFW while $11.17bn was commercial which are basically Eurobonds and Diaspora Bonds.
Lagos State has the highest foreign debt profile among the thirty-six states and the Federal Capital Territory, FCT, accounting for 5.64 per cent while Edo (1.09 per cent), Kaduna (.0.90 per cent) and Cross River (0.75 per cent) followed closely.
Similarly, total domestic debt was N16.63 trillion with Lagos State accounting for 3.19 per cent of the total domestic debt stock while Yobe State has the least debt stock in this category with a contribution of 0.17 per cent to the total domestic debt stock.
Responding to questions from the media, Olowo said, “Our professional position on debt issuance by Lagos State Government, there are two questions when debt is being considered, they are utilization and sustainability figures.
“For debt utilization alone, with fiscal Responsibility Act, 100 per cent of our debts are targeted towards capital projects.
“If you look at sustainability figures we are very much in line with international and local benchmarks.
“Currently, we finished 2019 at 29 per cent which is below 30 per cent benchmark. Going forward into medium-term by 2021, 2022, debt figure will come down to 25 per cent meaning that we will be able to manage our debts into the future with increasing revenue in the coming years.
“For Lagos debt charges, our External debt charges stand at N4.9 billion, internal debt charges is N29.7 billion, while charges on the bond are N5 billion. In totality, it amounts to N39.692 billion.
“Also, the deficit financing of the budget is in a total of N97 billion. The breakdown is External loan, N34 billion, while an internal loan is N63 billion.”
Egube explained that despite the debt profile, Lagos State remained the nation’s economic hub and one of the leading economies in Africa saying that some of the objectives of the 2020 budget include: To attract private sector investments by creating an enabling environment, aggressively develop, upgrade and maintain infrastructure, invest in human capital development, education and healthcare, facilitate sustainable social investment and enterprise, build impactful partnerships with the Federal Government, other States and Local governments, development partners and civil society among others.
The commissioner noted that the present administration inherited a prepared and partly implemented budget, but has been able to manage it judiciously in a transparent manner which improved the performance significantly through the reordering exercise approved by the Lagos State House of Assembly adding that the reordering exercise was designed to align with the THEMES agenda and position the budget for better performance.
The revised budget size was ₦873.532bn with total revenue of ₦620.532 billion. The budget recorded an overall performance of ₦583.733bn (73 per cent) as at 30th November 2019.
Due to several measures taken by the administration in the last quarter of the year, which included improved funding and execution of the budget, the performance of the Y2019 Budget was expected to close at above 80 per cent
Y2020 Budget Highlights
Egube explained that the current budget was the result of widely held consultations across the three senatorial districts, in addition to taking memoranda and feedback from stakeholders hosted by Members of the House of Assembly within their respective constituencies.
To drive the execution of the 2020 Budget, he said the administration would deploy a digitally enabled Performance Management System which is in line with the commitment to transparency and accountability in the management of public finances.
According to him:” This budget has taken into consideration the present economic realities in the World, Nation and Lagos State in particular, as well as the optimism for improvement in our revenue collections.
The Y2020 budget will most importantly promote massive investments in Traffic management and Transportation, Health and Environment, Education and Technology, Making Lagos a 21st Century Economy, Entertainment, Tourism, Security and Governance.
Y2020 Total Budget Revenue
The total budget size is ₦1.168Trillion and will be funded from a total revenue estimate of ₦1.071Trillion, comprising of the following: Total Internally Generated Revenue, TIGR, 886.041bn, Capital Receipts, 232.29 billion, Federal Transfer, 184.988 billion.
A significant percentage of the projected TIGR of N500 billion is expected to be contributed by Lagos Internal Revenue Service, LIRS.
He said, “We shall achieve this by expanding the tax net through the deployment of technology, among other initiatives, which includes massive investments in technology and other facilities to improve the efficiency in operations of all revenue-generating agencies.
“We believe that there are huge revenue-generating opportunities in the informal sector, including real estates, transportation, among others for which Lagos State is known for.
Included in the Capital Receipt is a brought forward balance of N175bn, that comprise of proceeds from Y2019 Loan and Bond issuance of ₦100 billion and ₦75bn respectively. This balance gives the administration a significant head-start in the implementation of major capital projects this year, 2020.
The deficit of ₦97.533bn is projected to be funded by a combination of internal and external loans, saying that the state has maintained a conservative posture in projection for Federal Transfers/Receipts in view of the production challenges within the Oil Sector.
A total expenditure of ₦1,168.562billion is budgeted for Y2020, broken down as follows:
Recurrent expenditure 457.529bn, Capital expenditure, 711.03bn, Capital to Recurrent ratio = 61:39
The recurrent expenditure is broken down as follows: Total Personnel Costs N167.907bn, Total Overhead Costs N249.930bn, Debt charges, N39.692bn
The recurrent expenditure is moderated at a level of 39 per cent of the Total Expenditure, out of which the personnel cost is N167bn representing 14.4 per cent of the Total Expenditure, which is well within the fiscal sustainability ratio of 25 per cent. The budgetary provision for personnel cost also takes into consideration, the new minimum wage.
Capital Expenditure accounts for 61 per cent of the total budget size. This is a demonstration of the administration’s commitment to massive infrastructure renewal and development towards actualizing a Greater Lagos.
Sectoral Budget Analysis
To emphasis, the administration’s resolve towards enhancing infrastructure development; proposed investments in some critical sectors among other areas highlighted below:
Roads and Other Infrastructures: A budgetary provision of N117.248bn (against the sum of N31.673bn expended by November Y2019) is provided for the maintenance of roads and other infrastructures within the State. This increase shall address the zero-pothole strategy, create link-roads within the metropolis to resolve traffic congestion and its attendant risks.
On the development of infrastructure along the coastline, we have a provision of N11.288bn that has been earmarked to enhance our coastal infrastructure in order to curb the ocean surge and protect lives and properties.
Traffic Management/Transportation, a total sum of ₦44.510bn (against Y2019 actual of N17.590bn) was budgeted under the Transportation family for the following projects: Blue and Red rail lines; Junction improvement all around the state; completion of trailer parks in the State; among others.
Education, the total sum of ₦136.100billion was budgeted for the Education sector, Science and Technology, the sum of ₦10.629bn is earmarked. Health, a total sum of N111.775bn (as against a total sum of N53.141bn in Y2019) was provided for.
On Environment, a total sum of ₦66.586bn was earmarked for this sector in Y2020, on
Sports Development, the sum total of ₦7.740bn has been earmarked, Housing and Community Amenities is ₦48.559bn, Agriculture and Food Security, a sum of ₦4.840bn was approved.
Commerce and Industry, the appropriation of the sum of ₦3.926bn was provided, Wealth Creation and Employment, the sum of ₦8.403bn was earmarked, Women Affairs, a total sum of ₦2.920bn has been earmarked, Youth and Social Development, a sum of ₦3.716bn was earmarked, while on Security and Governance the sum of ₦39.265bn was allocated,