By Amaechi Ogbonna and Omodele Adigun
In order to give Lagos a facelift that befits its status as a mega city, the state government is to devote for the capital project its entire N192billion loans proposed in the 2021 Apprpriation Bill.
This was disclosed by its Commisioner for Finance, Rabiu Olowo, Thursday in Lagos at a briefing on the 2021 Budget.
Olowo, who stated this in the company of other commissioners, explained that for a state like Lagos, with a lot of structural deficits, there is a lot to be done in terms of continuous improvement drive.
His words: “Let me start by saying that for a state like Lagos, with a lot of structural deficits, there is a lot we need to do in terms of continuous improvement drive. Debt is good especially when we are using it for capital projects. I think what is more important is our debt sustainability benchmark. We have two benchmarks that we follow: there is federal Debt Management Office (DMO) benchmark of 30 per cent revenue to debt. And, of course, there is a World Bank benchmark of 40 per cent. So, on that basis, we closed the year 2020 at 19.8 per cent; very far from any of the benchmarks we are talking about. As for the implications of the additional debt as regards the 2021 budget, we see ourselves landing at about 22 per cent. Debt charges as shown in the budget is about N81billion; total debt repayment is about N158 billion.
“On deficit financing, of course, most of the budget is predicated, and the foundation lies, on revenue. It means we have to go a-borrowing. “
On the analysis of the facilities, he said: “We will go for some domestic fund raising at the local capital market; two bonds of N100 billion; we will do external loans of about N52billion; and we will also do internal loans of about N41 billion.Everything adds up to about N192 billion. All these will be used 100 per cent for capital projects.”
Earlier, the Commissioner for Budget and Planning, Mr Sam Egube, said those things that need to be done in state come out of the size of the budget.
He stated: “So there is a rate at which Lagos must grow to address some of these things. It is not only to grow on the revenue side, but also to grow in the ingenuity at which we work with the private sector to deliver some of these objectives.”
“The 2021 budget is consistent with the THEMES agenda and designed to prioritise the completion of inherited ongoing projects.
“The total budget size is N1.164 trillion and will be funded from a total revenue estimate of N971.028 billion, comprising the following: Internally Generated Revenue, N723.817 billion; Capital Receipts, N71.811 billion and Federal Transfer, N175.400 billion.
“A significant percentage of the projected IGR of N512 billion is expected to be contributed bythe Lagos Internal Revenue Service (LIRS). We shall achieve this by expanding the tax net by simplifying the tax process, improving the work environment, training, and providing tools for our tax administration personnel. This will improve the efficiency in operations of all revenue-generating agencies.
“We believe that there are huge revenue-generating opportunities in the state, including real estates, transportation sectors and our markets generally. We will continue to use data and intelligence to unravel revenue opportunities and leakages.
“We have continued to maintain a relatively conservative posture in our projection for Federal Transfers/Receipts compared to our annual run rate in 2020 in view of the production challenges within the oil sector by keeping our expectation at N175 billion. The deficit of N192.494 billion is projected to be funded by a combination of internal and external loans.”