The debt status of most states of the federation exceeds 50 per cent of their annual revenues. For 18 states, the debt profiles exceed their gross and net revenues by more than 200 per cent. Lagos, Osun and Cross River states record over 480 per cent debt to gross revenue.
The Fiscal Responsibility Commission, which stated this in its 2016 Annual Report obtained by our correspondent in Abuja on Monday, said the development was contrary to the guidelines of the Debt Management Office on debt sustainability.
According to the guidelines, the debt status of each state should not exceed 50 per cent of the statutory revenue in the previous 12 months.
The report stated, “In the light of the DMO’s guidelines on the Debt Management Framework, specifically, sections 222 to 273 of the Investment and Securities Act, 2007 pertaining to debt sustainability, according to the guidelines, the debt to income ratio of states should not exceed 50 per cent of the statutory revenue for the preceding 12 months.”
However, an analysis presented in the FRC report showed that most states flouted the directive. In fact, the debt status of many states exceeded the debt to revenue ratio by more than 100 per cent. The analysis was based on the debt profile of the states as of December 31, 2016.
The states with the highest debt to gross revenue ratios were Lagos (670.42 per cent), Osun (539.25 per cent), Cross River (486.49 per cent), Plateau (342.01 per cent), Oyo (339.56 per cent), Ekiti (339.34 per cent), Ogun (329.47 per cent), Kaduna (297.26 per cent) and Imo (292.82 per cent).
Others were Edo (270.8 per cent), Adamawa (261.96 per cent), Delta (259.63 per cent), Bauchi (250.75 per cent), Nasarawa (250.36 per cent), Kogi (221.92 per cent), Enugu (207.49 per cent), Zamfara (204.91 per cent), and Kano (202.61 per cent).
The debt to net revenue ratio of the states puts some of the states in even more precarious situations. The debt to net revenue of Lagos, for instance, is 930.96 per cent, while that of Cross River is 940.64 per cent.
The only states whose debt did not exceed the 50 per cent ratio by more than 100 per cent are Anambra, Borno, Jigawa, Kebbi, Sokoto, Yobe and the Federal Capital Territory.