Peter Uzoho
The Lagos State government is to borrow N192 billion this year to finance infrastructure development in the state.
The funds will be raised domestically, with N100 billion expected to come through a bond issuance while N52 billion and N41 billion will be sourced through external and internal loans respectively.
The Lagos State Commissioner for Finance, Mr. Rabiu Olowo, gave the figures yesterday in Lagos, during a media roundtable on the “Facts-Behind-the-Figures” on the state’s 2021 budget.
The state Governor, Mr. Babajide Sanwo-Olu, had signed the N1.164 trillion 2021 Budget, tagged ‘Budget of Rekindled Hope’ into law last December, with the total capital expenditure put at N702.935 billion and the total revenue put at N460.587 billion.
However, Olowo said that the loans would be in naira to protect the state from exchange rate risk.
He said: “On deficit financing, of course, we know that most part of the budget is predicated on revenue.
“We cannot depend on our own internally generated revenue or federal transfers that we get from the federal government to have the kind of development that Lagos needs at this time. That means that we have to go out and borrow.
“The breakdown of the N192 billion deficit financing as shown in the budget, we will go out for some domestic fundraising in local capital market through the bond of about N100 billion.
“We will do an external loan of about N52 billion and we will also do an internal loan of about N41 billion, and everything adds up to about N192 billion.”
Olowo, however, said the benchmark on revenue-to-debt service in the 2020 budget was lower than the two benchmarks being followed, adding that the state closed 2020 at 19.8 per cent.
He explained: “I think what is more important is our sustainability benchmark. To answer the question straight, we have two benchmarks that we follow.
“There is the federal Debt Management Office benchmark of 30 per cent, revenue to debt, and of course, there is the World Bank benchmark, which is 40 per cent. So on that basis; we closed the year 2020 at 19.8 per cent, very far low from any of the benchmarks that I am talking about.
“And I think the question also moves to what will be the implication of the additional debt, giving the 2021 budget. We see ourselves landing at about 22 per cent, giving all the numbers, revenues and the additional debt we will put on our activities for 2021.”
According to him, Lagos State debt charges as shown in the budget is about N31 billion while its total debt repayment, including CDSA principal and interest, is about N158 billion.
Earlier, the Commissioner for Economic Planning and Budget, Mr. Sam Egube, had said the state was audacious in its plan to deliver the multi-billion naira red and blue rail metro lines.
He said the state is working with special funds with tier one banks in Nigeria for the funding of the rail projects, adding that it is completely Nigerian parties that are making the funds available.
He added that the state also has support from the Central Bank of Nigeria (CBN) in ensuring the receipt of the funds.
Also briefing journalists on the ongoing projects being supervised by her ministry, the Special Adviser to the Lagos State Governor on Works and Infrastructure, Mrs. Aramide Adeyoye, said the financial closure for the 4th Mainland Bridge construction will be achieved within the third and the fourth quarter of 2021 with the emergence of preferred bidders.
Adeyoye said the challenge being encountered by Lagosians on Itire Road would soon end, as the problem on the road will be addressed by the first quarter of the year.
The Commissioner for Health, Prof. Akin Abayomi, said the state is making special plans to secure COVID-19 vaccines to supplement the federal government’s planned vaccines roll-out.
