N359.32bn Deducted From States’ Revenues To Service Debts
The 36 states of the federation had their statutory revenues deducted by N359.32bn in 2017 for debt servicing, the Fiscal Responsibility Commission had said.
The FRC stated this in its 2018 Annual Report and Accounts obtained by our correspondent in Abuja on Thursday.
The report revealed that Osun State lost the highest amount in deductions as N28.99bn was debited from its statutory revenue of N39.43bn. This means that within the period, the state received only N10.44bn net revenue.
States often enter into lending agreements with foreign and local institutions that are guaranteed by the Federal Government.
Under such agreements, the states’ shares of the federation account, which is known as statutory revenues, are deducted at source for debt servicing. What the states receive after such deductions is known as net revenue.
In the report, the FRC said, “The total gross statutory revenue of the 36 states amounted to N2, 098,615,470,240.44 at the end of 2017 while their combined net statutory revenue stood at N1, 739,290,877,423.07.
“Akwa Ibom and Rivers had the highest share of N156, 685,320,476.79 gross statutory revenue while, Delta and Rivers followed with N139, 480,327,720.37 and N138, 146,967,672.43, representing 6.65 per cent and 6.58 per cent respectively of the total gross statutory revenue.
“Lagos State also followed closely with N123, 421,828,999.47 accounting for 5.88 per cent of the total gross statutory revenue.”
It added, “The high level of the gross statutory revenue of the three states (viz, Akwa Ibom, Delta and Rivers) is explained by the 13 per cent derivation revenue, which is earned by oil producing states.
“However, the high revenue of Lagos State is explained by her internally generated revenue generation drive especially Value Added Tax revenue. Lagos earns the highest VAT income in the country.”
Although VAT is part of the federation account, states are paid according to what comes into the VAT pool from them.
According to the report, Kwara State had the least gross statutory revenue in 2017. With a total of N37, 658,120,654.65, the state accounted for 1.79 per cent of the total gross statutory revenue that accrued to the subnational governments.