26 States Set For N878bn Deficit In 2021
Amidst a nationwide push against the recessionary economy, about 26 states of the nation are planning to spend about N878 billion in excess of what their revenue expectations can carry. This indicates that they also plan to borrow heavily to implement the budget.
Details of the various appropriation bills in the states’ legislatures indicate that the 26 states projected revenue stood at N4.97 trillion against a proposed budgeted expenditure of N5.84 trillion for 2021.
The states’ fiscal disposition in the 2021 is much in line with the federal government’s which also plans to run its 2021 fiscal operations on over N5.2 trillion deficit.
The dispositions of the states and the federal government appears to align with the Keynesian macroeconomic theory of total spending in the economy and its effects on output, employment, and inflation. By this disposition the government hopes to spend its way out of the current economic recession.
Nigeria’s economy slipped into recession in the third quarter of 2020 after recording two consecutive quarters of negative gross domestic product, GDP, figures.
Meanwhile, the states with the highest projected revenue are Lagos (N962.5 billion), Ogun (N320 billion), and Akwa Ibom (N255 billion).
States with the lowest projected revenue are Ebonyi (N64 billion), Kaduna (N112 billion) and Jigawa (N114.5 billion).
However, the states appear to be highly optimistic on revenue in 2021 given the provisions in their 2021 appropriation bill.
Economic Confidential Public Finance findings reveal that the 36 states of the federation presented a combined budget of N7.9 trillion for year 2021. This represents a 37 percent rise when compared to the N5.02 trillion in the revised budget for 2020.
The 2021 budget comprises capital expenditures of N4.3 trillion and recurrent expenditures N3.6 trillion respectively.
The recurrent expenditure covers provisions for wages and salaries for civil servants; overhead costs (electricity bills, purchase of diesel); consolidated revenue account charges; transfers (to local government, for example); interest payments on existing loans; and other (subsidies, for example).
The Capital Expenditure covers fundings for fixed capital assets, land or intangible assets, including building of schools, hospitals, roads, buying security equipment.