The Lagos State government has admitted that its debt, which stands at N39.69 billion, i quite high but assured that there is no cause for alarm.
The Commissioner for Finance, Rabiu Olowo, explained that the state’s debt profile is mostly overwhelmed by internal debt.
Details: State’s external debt is N4.9 billion, internal debt is pegged at N29.7 billion, while charges on the bond are N5 billion. This makes the total debt profile of the Lagos State Government N39.692 billion.
Among the States and FCT in Nigeria, Lagos has the highest foreign debt profile in Nigeria, accounting for 5.64% while Edo accounts for 1.095%, Kaduna follows with 0.90% and Cross River reportedly accounts for 0.75%.
While for domestic debt, Lagos State also leads the table with 3.19%of the total domestic debt stock while Yobe State has the least debt, accounting for 0.17% in this category. The revelation comes amidst the N1.168 trillion set for the 2020 budget which is an increase compared to last year’s budget of the State government.
Lagos debt level not alarming: According to Olowo, the state government has the capacity to sustain and finance its debt profile. He said Lagos State Government’s sustainability figures are in line with international and local benchmarks, stating that the state finished 2019 at 29% which is below 30% benchmark.
He said despite the debt profile of the State, Lagos remains Nigeria’s economic hub and one of the leading economies in Africa.
“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% 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.”
He added that “Currently, we finished 2019 at 29%, which is below 30% 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.”