2nd February, 2011
To finance the 2011 budget deficit, the Governor Babatunde Fashola-led Lagos State Government is going to borrow N79 billion from internal and external bodies.
Commissioner for Budget and Economic Planning, Mr. Ben Akabueze disclosed this yesterday while reviewing the performance of the state’s budget since 2007 when this administration came into power. He said that of 1.91 percent and would be financed through borrowing.
The figure will shoot up the debt profile of the state which seems to be growing by the day. The N79 billion needed to finance the budget far exceeded the N61.172 billion sourced to finance last year’s budget deficit of 1.47 percent.
The state government has several options to explore to raise the funds needed to finance the budget and could even go beyond borrowing N79 billion.
With many sources of borrowing available to government, it could borrow as much as N150.569 billion if it chooses to do so.
According to the provision of the 2011 budget, the government would explore the Development Policy Operation, DPO of the World Bank to obtain a loan of N30 billion and N26 billion from other external bodies not disclosed by government.
The government intends to source N33.570 billion through internal loans, while if it wants to go higher by borrowing above N79 billion, the bond market will serve as the other avenue as it intends to go into the market this year to raise N60 billion bond.
To repay the debt it currently owes, the state government plans to service a debt of N71.375 billion this year as against the N89.9 billion loan it serviced last year.
Out of the N71.375 billion it plans to pay this year, No.723 billion would be used to service external loans; N32.144 billion to service internal loans while it plans to save N38.508 billion to service the remaining part of the loan for this year.
Also, the interest to be paid on debt this year by the state government is at N12 billion. This is lower than the interest it paid servicing debt last year which was at N17.68 billion.
Out of the N12 billion, external loan interest will gulp N1.05 billion; internal debt charges, N6.958 billion and debt charges on bond, N3.992 billion.
Further more, in the approved budget, out of the total N68.229 billion Total Personnel Cost, N40.129 billion would be used to pay workers’ basic salary annually, which is higher than that of last year which was at N39.122 billion.
While N11.255 billion was budgeted as allowances for government officials, N3.01 billion will be set aside as government’s 7.5 percent contribution for the contributory pension scheme.
Other components of the Total Personnel Cost include corps members/interns cost – N0.360 billion; consolidated life N2.206 billion and other personnel costs – N2.003 billion.
However, the 2011 key budget objectives include: sustenance of law and order through improvement in crime combat and prevention capacity; construction/upgrading of old/new roads and bridges; implementation of the Integrated Mass Transit Programme; solid waste management and mitigation of global warming through greening and beautification programme.
Others are: protection of life and property through comprehensive emergency management; systematic physical planning for sustainable development control; construction/rehabilitation of public schools; including laboratories and libraries; staff welfare Enhancement; community-based vocational education; sustenance of the State’s free healthcare services and state-sponsored Home Ownership Mortgage Scheme.
— Kazeem Ugbodaga
