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States under heavy debt burden, exceed debt to revenue ratios

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5 years ago

February 7, 2020

Olu Emmanuel

Nigeria incurred N24.33b debt in 3 months - DMO

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Lagos, Osun lead

Lagos with a net revenue of N119. 02bn and a total debt burden of N968. 16bn led other states as they contravened the guidelines of the Debt Management Office (DMO) by contracting debts exceeding their 12-month revenues.

In the latest statistics released by Fiscal Responsibility Commission (FRC), the DMO

guidelines on borrowing provide that no state should have outstanding loans that are more than 50% of their total revenues in the previous 12 months.

In the report, all the states had debts more than 50% of their 12-month revenues.

The report showed that a state had debt to revenue ratios as high as 781% while some had lower debt to revenue ratios. However, the FRC argued that none of the states could be said to have overborrowed.

It hinged its argument on the fact that the President of the country that was supposed to set the borrowing limit for the states, according to the FRC Act, had not set any limit.

With Lagos State debt ratio standing at 814.41%, meaning it has gone beyond the DMO limit by 763.41%.

Lagos was followed by Osun State with a debt to revenue ratio of 781.71%. While it had net revenue of N22.84 billion, its total public debt stood at N178.52 billion. This means that the state had a debt to revenue ratio of 781.71% and had gone beyond the limit set by the DMO by 731.71%.

Other top states in terms of high debt to revenue ratios include Cross River, Ekiti, Ogun, Plateau, Edo, Bauchi, Adamawa, Kaduna, Nasarawa, Imo and Oyo States. The Federal Capital Territory Administration also made the list of top subnational governments with high debt to revenue ratio.

Cross River State had net revenue of N36.95 billion, a debt of N225.91 billion, debt to revenue ratio of 611.31%. It, therefore, had gone beyond the limit by 561.31%.

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Ogun State had net revenue of N39.64 billion, a debt of N130.42 billion and a debt to revenue ratio of 328.97%. The state, therefore, had passed the limit set by the DMO by 278.97%.

For Plateau State, the revenue stood at N43.89 billion while the debt stood at N109.23 billion. The debt to revenue ratio stood at 248.9% while it had gone beyond the limit by 198.9%.

Edo had net revenue of N69.17 billion, total debt of N171.63 billion and debt to revenue ratio of 248.13%. It overstepped the limit by 198.13%.

For Bauchi, the revenue stood at N54.02 billion while the debt stood at N133.48 billion, thereby giving debt to revenue ratio of 247.1%. The state exceeded the limit by 197.1%.

Adamawa had revenue of N49.51 billion, a debt of N119.68 billion and a debt to revenue ratio of 241.73%. It exceeded the limit by 191.73%.

Kaduna had revenue of N68.84 billion, a debt of N154.4 billion and a debt to revenue ratio of 224.26%. It exceeded the limit by 174.26%.

For Nasarawa, the revenue stood at N47.55 billion while the debt stood at N103.53 billion. The state exceeded the 50% ratio by 167.73%.

Imo had revenue of N54.18 billion, a debt of N117.05 billion and a debt to revenue ratio of 216.04% and therefore exceeded the limit by 166.04%.

Oyo had revenue of N59.29 billion, a debt of N123.75 billion and a debt to revenue ratio of 208.72%. It exceeded the limit by 158.72%.

However, states like Yobe, Jigawa, Katsina, Sokoto and Bayelsa have the least debt to revenue ratios.

Yobe had revenue of N36.21 billion, a debt of N52.87 billion and a debt to revenue ratio of 68.48%. It exceeded the limit by 18.48%.

For Jigawa, the revenue stood at N44.99 billion, the debt stood at N60.33 billion and the debt to revenue stood at 74.58%. It exceeded the limit by 24.58%.

Katsina had revenue of N61.65 billion, a debt of N49.93 billion and a debt to revenue ratio of 80.98%. It exceeded the limit by 30.98%.

For Sokoto, the revenue stood at N54.46 billion, the debt N50.64 billion and the debt to revenue ratio, 92.99%. It exceeded the ratio by 42.99%.

Bayelsa had revenue of N153.1 billion, a debt of N147.43 billion and a debt to revenue ratio of 96.29%. The state exceeded the limit by 46.29%.