B-R-O-K-E – Revenue commission says Nigerian states are insolvent

by Hauwa Gambo

Uhm... perhaps I borrowed too much?

Elias Mbam, chairman of the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), revealed yesterday that many of the states in Nigeria are broke – explaining that the cumulative external debts of the thirty six states stand at $2.165 billion.

Speaking to the Senate joint committee on national planning, finance and appropriation, he revealed that, according to documents from the Debt Management Office (DMO), the total external debts stock of all the states stood at $2.165 billion while that of the federal government stood at $3.501 billion – as at December, 2011.

“The Commission has observed with concern the huge domestic debt profile of the states as most of them are highly indebted to various local banks in short term borrowing and are substantially exposed to the Capital Market,” he said. “Most of these loans are tied to Irrevocable Standing Payment Orders (ISPOs), issued to the Accountant-General of the Federation to deduct directly from their monthly allocations due to the states, thereby preventing them from meeting their minimum basic obligations to the citizens.”

Take a peek into some of the state’s and their debts:

Lagos – $491.847 million

Kaduna – $182.261 million

Cross river – $107.532 million

Ogun – $94.573 million

Oyo – $78.085 million

Katsina – $74.138 million

Delta – $15.404 million

Taraba – $20.396 million

Akwa Ibom – $62.648 million.

The least is Borno, coming in at a meagre $12.957 million.

It’s not just the borrowing that’s the problem, according to the revenue boss, it is the impunity. While “deficit budgeting is tolerable within an acceptable limit,” he said. “Its endless application has endangered and forced the state governments to resort to excessive borrowing to meet their basic expenditure demands even where they have no capacity to pay back.

“The regular sharing of Excess Crude Account is an indication of the desperate financial position of the state governments to get funds to meet costs of governance. For instance, $1.5billion was shared in three equal instalments from the Excess Crude Account in 2011 alone of which the states received $400.800 million.”

Apparently, it might be time for us to avert our gaze a little from President Goodluck Jonathan and look at the government secretariat closest to us.

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