The Ogun State Government in south west Nigeria has presented its 2023 budget, saying it will be funded with both the Internally Generated Revenue, IGR and monthly allocations from the federation account.
The state government also targeted two Local Government Areas in the state for oil exploration as parts of ways to fund its budget.
The State Commissioner for Finance, Dapo Okubadejo said this in Abeokuta, the state capital during a media parley on the budget breakdown.
Okubadejo who noted that the plan by the government to fund this year’s budget of N472b, said “N210 billion will be source from the Internally Generated Revenue ; N128bn from Capital receipt and Federal Account Allocation Committee revenue are proposed to fund the budget.
” Our IGR , federal allocation which is becoming unreliable and our Capital receipt would be used to fund our budget. We are going to make use of our oil in Tongeji Island and Ogun waterside area of the state,” the Commissioner explained.
Meanwhile, Okubadejo, who was flanked by the Commissioner of Budget and Planning, Olaolu Olabimtan, clarified the misconceptions surrounding the debt profile of the state, saying the present administration inherited N142 billion debt from the previous administration of Senator Ibikunle Amosun.
Dept Profile
Okubadejo said, the state has a high debt profile because the state is economically viable to carry the debt burden.
He stressed that, it is wrong for anyone to compare the debt profile of Ogun state to any other state without putting into consideration, the economic viability and the capacity of the states.
Okubadejo who also doubles as the Chief Economic Adviser to the Ogun State Governor, Dapo Abiodun said, obtaining loan was not the problem, but if the loan must be put to good use for the benefit the citizens.
Okubadejo explained that, the increasing exchange rate has worsened the debt profile of the state, saying that the previous administration also failed to declare the pension and gratuity debt of the state, which he said also contributed to increase in the debt profile of the state.
“When we came in 2019, the total debt profile of Ogun state was about N142 billion, the foreign debt component of that was $121 million. Just take that $121 million at N450 per dollar today compare to N220 per dollar in 2019, there is an exchange rate implication on that $121 million deb, “he clarifies.
“When we came in 2019, we saw that the pension and gratuity liabilities of the state were not in the books. The liabilities were not booked in the debt profile of the state in 2019,” Okubadejo said.
He argued that, the fact that Lagos state has the highest debt profile does not make it a poor state.
Okubadejo said, “there seems to be a lot of misconceptions about debts generally. You cannot talk about debt in isolation. You cannot generally compare debts of one state to the other without doing some very indebt analysis because the sizes of the economies of states are different.”If two states have the same level of debts, the question you need to ask yourself is, ‘is the state, based on its size of economic activity able to withstand this debt’?”
“It is not debt that is the problem, but what you do with the debt, is the issue and the favourable terms you get for those debts and whether the debts will help stimulate economic activities,” he explained.
Governor Dapo Abiodun signed the 2023 budget into law on Thursday 29th December, 2022.
The Governor promised to ensure full implementation of all the items contained in the budget to sustain the momentum of the “Building Our Future Together” agenda of his Administration.
Confidence Okwuch
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