Thirteen states unable to meet recurrent, debt obligations ― BudgIT
Thirteen of 36 state governments were not able to meet their recurrent and debt obligations from their total revenues in 2019 according to the 2020 State of States Fiscal Sustainability Index report of BudgIT, a civil society organisation.
Rivers State occupies first position on the index, followed by Anambra, Ogun and Lagos States.
Most of the remaining 23, still fall below the sustainability point among which eight which had really low (less than N6bn) excess revenue and had to borrow heavily to fund their capital projects.
Oyo, Kogi, Osun and Ekiti are the most unsustainable states.
Others in the category are Plateau, Adamawa, Bauchi, Gombe, Cross River, Benue, Taraba and Abia.
Others are Bayelsa, Osun, Ekiti and Plateau occupy the least positions.
Based on their fiscal analysis, only Rivers, Kaduna, Akwa Ibom, Ebonyi and Kebbi States prioritised capital expenditure over recurrent obligations while thirty-one (31) states prioritised recurrent expenditure according to their 2019 financial statements.
“Recurrent expenditures are not necessarily a bad thing, especially when skewed towards sectors like Health and Education.
“However, nine of the states in this category had overhead costs that were larger than their capital expenditures.
“These states are: Ekiti, Kogi, Kano, Plateau, Kwara, Nasarawa, Taraba, Adamawa and Benue,” said Abel Akeni, BudgIT’s Research Lead.
All 36 states’ debts surged by 162.87% (N3.34tn), from N2.05tn in 2014 to N5.39tn in 2019, with 10 states accounting for approximately half or N1.68tn of this increase.
Seven of these states are from the South while three are from the North.
“To achieve fiscal sustainability, states need to grow their IGR as options for borrowing are reduced due to debt ceilings put in place by the Federal Government to prevent states from slipping into a debt crisis.
“On subnational epidemic preparedness, it is important for states to prioritize health financing especially on Water, Sanitation and Hygiene (WASH).
“The report noted that aside COVID-19 states are currently battling at least six other deadly diseases which already have vaccines or known treatment.
“In 2019, all 36 states recorded 94,500 cases of the deadly cerebrospinal meningitis (CSM), measles, Lassa fever, yellow fever, monkeypox and cholera combined.
“It is in the self-interests of State Governments to grow their IGR and also invest in appropriate health systems through their budgets and other sustainable methods.
“Although some states have seen some improvement in their IGR between 2014 and 2019, there is still a need to put systems in place for aggressive IGR growth within the subnational economies, especially as falling crude oil prices, OPEC production cuts and other COVlD-19 induced headwinds are set to impact Federal.
“The report predicted that Bayelsa, Borno and Katsina will suffer serious revenue shortfalls over the next two years because of their almost complete reliance on federation account as oil prices will likely continue to dwindle.”