The Federal Account Allocation Committee (FAAC) has said that the 36 state governments in the country expended N3.6 billion on debt service in January this year.
It translates to 1.8% of the states’ net statutory allocation for January 2020, which stood at N206.75 billion.
The Debt Management Office’s latest report on the external debt status of states put the figure as of 30th June 2019 at $3.96 billion.
Lagos came top on the list as it spent N1.23 billion on debt service in the month.
Oyo expended N321.05 million; Kaduna N212.72 million; Rivers N224.3 million; Cross River N114.17 million; Bauchi N122.54 million and Katsina N101.95.
Abia, Adamawa, Akwa Ibom, Anambra, Bayelsa, Benue, Borno, Delta and Ebonyi States spent N49.08m, N47.88m, N49.99m, N48.79m, N37.12m, N25.85m, N16.98m, N27.21m and N43.68m respectively on debt obligations in the month in question.
Edo committed N78.96 million to debt repayment, Imo N52.49m; Jigawa N28.35m and Kano N68.65m while Ekiti spent N86.49m; Enugu N66.5m and Gombe N33.51m for the same purpose.
Kebbi’s debt service bill was N40.52m; Kogi’s N28.758m; Kwara’s N37.14m; Nasarawa’s N34.22m; Niger’s N43.8m; Ogun’s N65.96m; Ondo’s N51.25m; Osun’s N104.63m; Plateau’s N21.79m; Sokoto’s N37.26m; Taraba’s N22.65m; Yobe’s N33.98m and Zamfara’s N28.43m.
Godwin Eohoi, Registrar Chartered Institute of Finance and Control of Nigeria, warned states about the potential of their debt burden skyrocketing further, which could result in a debt crisis.
“Currently, at the federal level, what we are still doing is debt servicing using a huge proportion of the annual budget to pay debt. That is serious because the money that you would have used for other things is now being used to pay debt.
“If you look at the sub-national level, their debt is mounting and with such mounting debts, the amount required to service them would be quite huge. I think we should not even accumulate further debt beyond what we currently owe,” Eohoi said.
Chijioke Ekechukwu, erstwhile Director General of Abuja Chamber of Commerce and Industry, said “it is expected that the debt profile of a country would rise considering the fact that we have a deficit budget at both federal and state levels. So, it is expected that they would need to continue borrowing to meet the increased size of the deficit.
“However, these borrowings portend danger for the economy because our debt profile is rising and we do not know when we are going to scale it down.”