Government cautions states against new loans as local debt hits N3tr
• Foreign component rises to $3.567b
• Lagos, oil-producing states are largest debtors
• Five states default in debt data reporting
State governments have been advised to embrace frugality and a new strategy in fiscal plans and implementation as the era when they had easy access to borrowing from either foreign or local windows is over.
The new Director–General of the Debt Management Office (DMO), Patience Oniha, gave the advice yesterday in Abuja when the Edo State governor, Mr. Godwin Obaseki, visited to congratulate her on her recent appointment as the new debt manager for the country.
Oniha said the decision was taken because there was no longer huge allocation to states from the Federation Accounts Allocation Committee [FAAC] from where borrowed funds could be deducted, hence continuous exposure to new lines of borrowings may no longer be sustainable.
According to her, it is unfortunate that oil mineral resources have continued to be the dominant contributor to the Federation Account. She advised that states need to deploy new strategic thinking on how to address the financing of their already bloated debt stocks as well as how to generate funds to execute their plans aside from borrowings.
Records obtained by The Guardian from the DMO yesterday indicated that from a domestic debt stock of N1.537 trillion by the end of December 2013, the figure has more than doubled, just three years later, to a new height of N2.958 trillion as at the end of December 2016.
“Previously, we could rely on funds from FAAC, and in addition to that, we could borrow both at the federal and at the state levels because there was no challenge. But I think the times have changed. Revenues are under severe pressures, we are still dependent on oil, non-oil revenues are picking up, but that is still a journey.
“So it means now, and in future, we need to do things so much differently. We must be more strategic in the management of public finance so the language I always use in my previous work where I was at the Efficiency Unit is that it’s no longer business as usual. We can’t collect money from FAAC, borrow, continue and wait until the next month. So at various levels, we need to be more strategic and more creative in the things that we do.”
Oniha said while the Federal Government had initiated several measures to increase non-oil revenue, control cost, states like Edo had embarked on a number of initiatives, that are commendable.
The states’ domestic and foreign debt stock indicates that Lagos and some oil-bearing states such as Rivers, Bayelsa, Delta, Akwa Ibom, and the Federal Capital Territory [FCT] are the heavy debtors in the domestic debt components. Their debt stocks are: Lagos (N311.755 billion); Delta, N242.231 billion; Akwa Ibom, 155.431 billion , Bayelsa, N140.177 billion and FCT, N152.804 billion.
The least owing states in the local debt component is Anambra with N3.993 billion; Jigawa – N19.005 billion and Yobe -N13.581 billion.
The document also discloses that five states: Jigawa, Ogun, Akwa Ibom, Katsina and Rivers are equally non-compliant in their debt data reporting to the DMO as they were not up to date as at December 31, 2016