- Targets 10% increase in revenue generation
By Gboyega Akinsanmi
The Lagos State Government has said it has re-engineered its outstanding internal loans, saying the decision has reduced the burden on its internally generated revenue (IGR) and saved N3.8 billion monthly.
The state government has also said it has been able to save N5.99 billion for adopting the Treasury Single Account (TSA), thereby enhancing transparency and efficiency in its financial management.
The figures were contained in a presentation made by the Commissioner for Finance, Dr. Mustapha Akinkunmi, at a news conference to mark the first anniversary of Governor Akinwunmi Ambode in office.
The commissioner addressed the conference alongside his Information and Strategy counterpart, Mr. Steve Ayorinde and the Accountant General of the state, Mrs. Abimbola Umar, among others.
At the conference, Akinkunmi said the state government successfully re-engineered the state’s outstanding internal loans “to reduce burden on IGR and technically saved N3.8 billion per month.”
He disclosed that the proceeds from the re-engineering of the state’s outstanding internal loans “has been applied continually for the execution of capital projects. In different parts of the state.
“This was achieved by re-negotiating interest rates from an average of 18 per cent monthly (N5.35 billion monthly payment) to 12.5 per cent (N1.52 billion monthly payment),” he explained.
He revealed that the state had successfully restructured its outstanding bonds from bullet payment to amortising payment “to reduce debt service resulting in huge savings recorded from this initiative.
“Through this, we have also achieved savings of over N500 million in monthly contributions to Consolidated Debt Service Account (CDSA) and over N40 billion saved in interest payments over the lifetime of the instruments.”
Also, the commissioner acknowledged that the implementation of the TSA had been very rewarding to the state, noting that the state government had been able to save a sum of N5.99 billion through it.
As a result of the TSA, Akinkunmi said enhanced transparency and efficiency “has increased the IGR through seamless revenue generation and collection and improved cash management in the state. This has resulted in savings of N5.990 billion.”
He added that all revenue generating agencies in the state had been tasked to increase revenue target by 10 per cent, even though the state generated N101.7 billion as revenue in the first quarter.
He said the state “has a taxable population of at least eight million, signalling growth prospects for tax collection. Frantic efforts have been set in motion to grow IGR by 50 per cent in 2017 / 18 by the GIS Land Administration Project and the Smart City Project.
“The state’s strong internal revenue base underpins its borrowing capacity and due to its impressive credit history, Lagos State’s legal borrowing capacity exceeds that allowed to other States.
“The current composition of the state’s borrowing reflects improvements in debt management over the course of the year. A recent restructuring of loans/bonds will save the state over N40 billion over the next four years.”
Akinkunmi said as a reflection of its strong track record of public finance management and administrative reforms, the state successfully drew down the third and final tranche of the World Bank Development Policy Operation, DPO facility (DPO III) in April this year worth $200m.
He said Lagos would continue to manage efficiently its financial resources to deliver more dividends of democracy, saying the state’s debt sustainability ratios were all within World Bank guidelines and that its credit ratings remained one of the best in the country presently.