States Spent N3.6bn Servicing External Debts In January — FAAC
A total of N3.6bn was spent by the 36 state governments servicing their external debt obligations in the month of January.
The amount was arrived at based on an analysis of their allocation for the month of January by the Federation Account Allocation Committee.
The N3.6bn spent on debt service represents about 1.8 per cent of their net statutory January allocation of N206.75bn.
Based on statistics from the Debt Management Office, the external debts of the entire 36 states were about $3.96bn as of June 2019.
The debts are from multilateral and bilateral sources.
Some of them are China Export-Import Bank, Japan International Cooperation Agency, KFW Development Bank, Euro-bond and Diaspora Bond.
An analysis of the FAAC document showed that Lagos State with about N1.23bn spent the highest amount servicing its external debt obligations.
This is followed by Oyo State with N321.05m; Rivers, N224.3m; Kaduna, N212.72m; Bauchi, N122.54m; Cross River, N114.17m and Katsina, N101.95m.
Similarly, the sum of N49.08m was used by Abia State to service its debt; Adamawa, N47.88m; Akwa Ibom, N49.99m; Anambra, N48.79m; Bayelsa, N37.12m; Benue, N25.85m; Borno, N16.98m; Delta, N27.21m and Ebonyi, N43.68m.
In the same vein, the analysis of the allocation showed that Edo spent N78.96m on debt servicing; Ekiti, N86.49m; Enugu, N66.5m; Gombe, N33.51m; Imo, N52.49m; Jigawa, N28.35m and Kano, N68.65m.
Also, Kebbi incurred N40.52m on debt service; Kogi, N28.758m; Kwara N37.14m; Nasarawa, N34.22m; Niger N43.8m; Ogun, N65.96m; Ondo, N51.25m; Osun, N104.63m; Plateau, N21.79m; Sokoto, N37.26m; Taraba, N22.65m; Yobe, N33.98m and Zamfara, N28.43m.
The Registrar, Chartered Institute of Finance and Control of Nigeria, Mr Godwin Eohoi, urged the state governments to exercise caution in increasing their debt profiles in order to avoid debt crisis.
He urged the state governments to discontinue borrowing in order to avoid a situation where a huge chunk of their annual budget would be spent on debt servicing.
“Currently, at the federal level, what we are still doing is debt servicing using a huge proportion of the annual budget to pay debt. That is serious because the money that you would have used for other things is now being used to pay debt.
“If you look at the sub-national level, their debt is mounting and with such mounting debts, the amount required to service them would be quite huge. I think we should not even accumulate further debt beyond what we currently owe.”
Also speaking, a former Director-General, Abuja Chamber of Commerce and Industry, Dr Chijioke Ekechukwu, said the rising debt level portended danger for the economy.
“It is expected that the debt profile of a country would rise considering the fact that we have a deficit budget at both federal and state levels. So, it is expected that they would need to continue borrowing to meet the increased size of the deficit.
“However, these borrowings portend danger for the economy because our debt profile is rising and we do not know when we are going to scale it down,” he added.