Lagos State government on Friday explained the rationale behind the deficit financing of 2022 Budget estimates to the tune of N521.274bn, asserting that the financing is within the fiscal sustainability of 40 per cent.
Governor Babajide Sanwo-Olu had on Wednesday, 24th November 2021 proposed the Y2022 Appropriation Bill of N1.388trn to the Lagos State House of Assembly for consideration.
The State House of Assembly had after deliberation and engagement with the MDAs, passed an amended Bill of ₦1.758trn on Wednesday, 29th December 2021, and was later signed into law by Mr Governor on Friday 31st December 2021.
The budget, which is tagged: “Budget of Consolidation,” has total revenue of ₦1.237trn.
The State Internal Revenue Service (LSIRS) is expected to generate 73.5% (N599,04bn) while about 19.2% (N156.65bn) is expected to be generated by other MDAs of government.
The State Commissioner for Economic Planning and Budget, Mr Sam Egube, while speaking during a press briefing on the Appropriation Law 2022, disclosed that the deficit funding requirement is ₦521.275bn, which according to him, is at 21% of Debt service to total revenue of the state.
Egube described the 2022 Budget as is a landmark budget in the history of the state both in its size and texture, saying the approved Y2022 Budget of ₦1.758trn was made up of ₦1.167trn Capital Expenditure and ₦591.281bn Recurrent Expenditure, resulting in a Capital to Recurrent ratio of 66:34, which he said was strongly in favour of Capital Expenditure.
According to him, the overriding objective of the budget was to substantially complete existing and ongoing infrastructure projects in the state.
“It is a landmark budget in the history of the state both in its size and texture. The approved Y2022 Budget of ₦1.758trn made up of ₦1.167trn Capital Expenditure and ₦591.281bn Recurrent Expenditure, resulting in a Capital to Recurrent ratio of 66:34, which is strongly in favour of Capital Expenditure.”
“Total Revenue is estimated at ₦1.237trn while deficit funding requirement is ₦521.275bn, which at 21% of Debt service to Total revenue, is within the fiscal sustainability benchmarks of 40%,” he said.
“Infrastructure is essential to statewide economic and social development. It is, therefore, important that we accelerate the completion of our ongoing project to release the inherent value of the projects to the people of Lagos.
“This is especially important given that this is the last full-year budget of this administration. Accordingly, we have increased our investment in infrastructure by 86% over the prior-year budget to N619billion representing 35% of the entire budget size,” he added.
The commissioner listed the targeted projects to include: Completion of eight Stadia across the five Ibile divisions of Lagos State, Construction and Rehabilitation of schools across the state to significantly improve access to quality education and Construction of the 6-lane reinforced concrete Lekki-Epe Expressway from Eleko junction to Epe T-junction.
Others, according to Egube, are Procurement of 62 fire vehicles to improve the state fire response service all over Lagos, Construction of 130 bed New Massey ultra-modern and fit for purpose Pediatric programmed and emergency general hospital, Construction of the Opebi Link Bridge to Maryland that will improve significantly travel time and alternative route options the axis, among others, saying all these projects are contractor funded, with structures that provide very beneficial payment terms that give the state upfront value (front-loaded) ahead of payments; thereby increasing the sustainability benefits to the state.
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