Only Lagos,Rivers,Anambra Can Meet Expenses,As Ogun,Kano Drop From Top Five IGR- Report - EDU-BIZNEWS


Tuesday, September 28, 2021

Only Lagos,Rivers,Anambra Can Meet Expenses,As Ogun,Kano Drop From Top Five IGR- Report

Only three (3) Lagos,Rivers and Anambra states out of the 36 states in Nigeria  can meet their operating expenses obligations with a combination of their IGR and Value Added Tax (VAT) according to a report by a Non Governmental Organization BudgIT’s in its index A' ranking

Two other states Ogun and Kano  however dropped out of the top five (5)category to 19th and 22nd places,  due to a sharp decline in their IGR in 2020

Rivers State in the report released on Tuesday, emerged as the best sub-national in the overall 2021 Fiscal Performance Ranking

The  Non-Governmental Organisation (NGO) which focuses on fiscal performances of both federal and state governments in the country in the report explained that “the fiscal fundamentals of this state (Rivers), compared to others in the country, are more prudently managed.”

In the overall ranking, two states – Ebonyi and Kebbi – made it as new entrants to the top 5 category.

This was driven largely by growth in both states’ IGR as recorded by the NBS. Ebonyi state grew its IGR by 82.3% from N7.5bn in 2019 to N13.6bn in 2020, while Kebbi state grew its revenue by 87.02% from N7.4bn in 2019 to N13.8bn in 2020.

According to the NGO, “For this year’s report, we examined states’ fiscal health using four key metrics namely; the ability of states to meet their operating expenses with IGR and VAT, states’ ability to cover their operating expenses and loan repayment with their total revenue, how much fiscal room states have to borrow more, and the degree to which each state prioritises capital expenditure with respect to their operating expenses".

Cumulatively, the 36 states total debt burden increased by N472.63bn (or 8.78%) from N5.39tn in 2019 to N5.86tn in 2020.

The organization explained that the report  was driven largely by exchange rate volatility which saw the value of the naira jump from N305.9/$1 in 2019 to N380/$1 as of December 31st 2020. 

States with the highest foreign debt were significantly hit due to negative exposure to exchange rate volatility.

The report identified the states as : Lagos, Kaduna, Edo, Cross River and Bauchi.

Furthermore, five (5) states accounted for more than half (that is 63.63% or N300.7bn) of the net year-on-year sub-national debt increase of N472.63bn for all the states between 2019 and 2020: the states are Lagos, Kaduna, Anambra, Benue and Zamfara.

Based on each state’s 2020 revenue, five states prioritized investment in infrastructure by spending more on capital expenditure than operating expenses.

The states are Ebonyi, Rivers, Anambra and Cross River states in the south and Kaduna state in the north.

These states appeared at the top of the ‘Index D’ ranking.

According to the NGO, Nineteen states, including eight oil-producing states, saw a year-on-year decline in their capital expenditure, while sevUenteen states were still able to improve their investment in capital expenditure, from 2019 levels despite fiscal constraints induced by COVID-19.

“Without a doubt, economic shocks from the COVID-19 pandemic took a toll on states’ Internally Generated Revenue (IGR) and their share of federally collected revenue in 2020; thus the need to explore options for building back the subnational economies cannot be overstressed,” BudgIT said.

No comments:

Post a Comment