BudgIT has raised concern on the fiscal sustainability of Cross River, Osun and Ekiti states in its just released 2018 edition of the State of the States publication.
The document which shows the fiscal position of states in Nigeria was released on Tuesday, with Rivers, Delta, Bayelsa and Lagos states topping the fiscal sustainability index.
BudgIT in the report said it is “extremely concerned with the poor fiscal management thinking in Cross River with its bogus budget plan of N1.3 trillion, which severely weighed it down on the index. Cross River’s budget is the highest amongst the states, surpassing N1.046 trillion budgeted by Lagos State.
Cross River currently ranks fourth on the level of external debt and 10th on domestic debt ranking with a $167.92 million and N125.64 billion debt respectively.
According to the 2018 State of States, Cross River which was at the bottom of the fiscal sustainability index, last year raked in N18.1 billion in Internally Generated Revenu (IGR).
BudgIT’s research also showed that Osun State is not out of the woods as it still ranks 35 out of the 36 states.
Osun which has been struggling to pay its workers had budgeted N176.4 billion for the 2018 fiscal year, having generated N6.48 billion internally in 2017.
BudgIT said states needed to look beyond rhetorics and commit to a reduction in its operating costs, including significantly slashing its unreasonable overheads bill while freeing up more spending for social and economic infrastructure.
“States also need to link future borrowing to sustainable projects, which can pay back the capital cost of its current loans and improve the overall income profile of the state.
“Economic planners at the state level are also advised to improve tax collection efficiencies and realign budgeting with statewide plans. Significant investment is needed to improve the overall economic performance at the state level, which invariably could create jobs that feed into states’ internally generated revenue.
“Improve spending is also critical for value-added tax revenue. Export opportunities in aquaculture, agriculture, manufacturing, trade, logistics and tourism abound across states, but it seems states lack the rigour and foresight to explore them.”
Lagos dropped from second to fourth place on the fiscal sustainability index notwithstanding the state’s economic advantage.
Lagos’ internally-generated revenue, when compared to many of its peers, is relatively high.
The state’s IGR as at the end of 2016 was N287 billion, from 2015 levels of N268.2 billion.
In 2018, the state is planning a recurrent expenditure spending of N305 billion or N25 billion monthly.
With its IGR not expected to grow significantly above N300 billion, while its share of revenue from FAAC in the first six months of 2017 was N6.6 billion, BudgIT said Lagos’ overheads cost and debt which is unusually elevated, weighed down on its revenue and its performance on the 2018 fiscal sustainability index.
BudgIT also sees a commendable appearance by the states with low expenditure outlay and sizeable debt such as Anambra, Enugu and Katsina.
We also noticed that Abia had tightened its recurrent projection, providing it with the opportunity to leap on our sustainability rankings.