How external debts gulped N33.9bn from Nigeria’s States revenue allocations
…as external debt hits N24.9trn in Q1
Motolani Oseni
Due to high external debts by the state governments, a whopping sum of N33.9 billion has been deducted from the revenue disbursement to states by the Federation Account Allocation Committee (FAAC) in one year.
This is even as the nation’s debt profile hit a new high of N24.9 trillion in March 2019, the analysis of reports of revenue disbursement by FAAC, which was obtained from the National Bureau of Statistics (NBS) has revealed.
The NBS data showed that the sum of N33.9 billion was deducted from monthly allocation entitled to states between June 2018 and May 2019. This is believed to be deductions in the form of loan servicing obtained from external sources.
Further breakdown of the data revealed that Lagos State parted with the highest amount of N10.3 billion from its allocation, as the State’s domestic debt stock, is the biggest of all, rising to N542 billion in March 2019.
Kaduna State ranks third, with the sum of N2.28 billion deducted, leaving the State with an estimated N93 billion debt profile.
Cross River follows Kaduna slowly, having repaid N2.1 billion debt in the last one year, with N167 billion in debt stock.
Oyo, Rivers, Osun and Katsina all repaid above N1 billion each within the period.
Just recently, the Debt Management Office (DMO) released the country’s debt stock data and the report showed that only domestics debts accruing to States Governments rose to N3.97 trillion in March 2019.
On the other hand, a proportion of the total N7.8 trillion total external debt is still accruable to the states.
Recent reports on FAAC disbursement has revealed some worrying trends, as revenue allocation declined by N1.3 billion in May 2019.
In April, a total of N617.5 billion was disbursed, while the disbursement dropped to N616.2 billion in May 2019.
This means that while states’ allocations are depleting, a portion of their monthly allocation constantly bookmarked to service debt.
Debt management: Specifically, loans or debt granted to countries and states come with terms or conditions which may include cash to cover repayment of interest and principal on a debt for a particular period.
Debt can be flexible or otherwise, with a wide choice of financial conditions that are specifically tailored to meet a country’s overall debt management strategy.
Nigeria’s debt category is largely dominated by 41 per cent of multilateral and bilateral sources from the World Bank, Bank of China, the African Development Bank and so on.
In order to manage the debt, billions are periodically subtracted from both States and the Federal Government in the form of debt servicing being collected.
