-As State targets N62bn monthly revenue
Lagos State Government on weekend explained the rationale behind the deficit financing of 2022 budget estimates to the tune of N521.274bn, noting the financing is within the fiscal sustainability of 40 percent.
Lagos State Governor, Mr Babajide Sanwo-Olu had on Wednesday, 24th November 2021 proposed Y2022 Appropriation Bill of N1.388trn to the Lagos State House of Assembly for consideration.
After deliberation and engagement with the MDAs, an amended Bill of ₦1.758trn was subsequently passed on Wednesday, 29th December 2021 by the State House of Assembly and was signed into law by Mr. Governor on Friday 31st December 2021.
The budget which is tagged budget of consolidation, has total revenue of ₦1.237trn.
The State Internal Revenue Service is expected to generate 73.5% (N599.04bn) while about 19.2% (N156.65bn) is expected to be generated by other MDAs of government.
The figure represents an approximate N62bn monhly revenue target in the State.
Speaking during a press briefing on the Appropriation Law, 2022, the State Commissioner for Economic Planning and Budget, Mr Sam Egube disclosed that the deficit funding requirement is ₦521.275bn, which according to him, is at 21% of Debt service to Total revenue of the State.
While giving the revised budget for 2021, the Commissioner stated, out of ₦1.257trn budget size, there was a total revenue of ₦984.573bn and deficit financing of ₦271.994bn.
He explained that as at November 30th, 2021, the budget posted a performance of 73%, adding Revenue Performance was 75%, while Capital & Recurrent Expenditure performed at 65% & 83% respectively.
He added, “The 65% performance of Capex is the result of our closure of the 100billion Bond transaction, which was oversubscribed in December 2021. As a result, we believe that Capex performance will close at about 85% by December 2021. This therefore is expected to enable the state achieve a strong budget performance of about 89% by year end 2021 despite the daunting challenges in the year.”
The Commissioner said, 2022 budget “is a landmark budget in the history of the state both in its size and texture. The approved Y2022 Budget of ₦1.758trn made up of ₦1.167trn Capital Expenditure and ₦591.281bn Recurrent Expenditure, resulting in a Capital to Recurrent ratio of 66:34, which is strongly in favor of Capital Expenditure.”
Total Revenue is estimated at ₦1.237trn while deficit funding requirement is ₦521.275bn, which at 21% of Debt service to Total revenue, is within the fiscal sustainability benchmarks of 40%.”
While giving a rundown of the budget, he said, “A total expenditure of ₦1.758Trillion is budgeted for Y2022 with Recurrent Expenditure (Debt Inclusive) of 591.281bn while Capital Expenditure has 1.167trn.
This represents Capital to Recurrent ratio of 66:34.
Egube noted that, the overriding objective of the budget was to “Substantially complete existing and ongoing infrastructure projects
He said, “Infrastructure is essential to statewide economic and social development. It is therefore important that we accelerate the completion of our ongoing project to release the inherent value of the projects to the people of Lagos. This is especially important given that this is the last full year budget of this administration. Accordingly, we have increased our investment in infrastructure by 86% over the prior year budget to N619billion representing 35% of the entire budget size.
*Prioritization of existing, contractor funded (front loaded) infrastructure projects:
“Completion of eight Stadia across the five Ibile divisions of Lagos State, to facilitate youth development, engagement and community sports
“Construction and Rehabilitation of schools across the state to significantly improve access to quality education
“The Construction of the 6-lane reinforced concrete Lekki Epe express way from Eleko junction to Epe T-junction. This strategic project is aimed at accommodating the increasing huge and heavy vehicular movement in the Lekki Epe axis especially when the deep seaport and the Dangote refineries et al comes into operation.
“Procurement of 62 fire vehicles to improve our fire response service all over Lagos by further decentralization of operating locations all over the state. This will strengthen our emergency response capability.
“Construction of 130 bed New Massey ultra-modern and fit for purpose Pediatric programmed and emergency general hospital. We believe that when this hospital, which will be located at Lagos Island is completed, it will be the largest specialist children hospital in sub- Saharan Africa.
“Construction of the Opebi Link bridge to Maryland that will improve significantly travel time and alternative route options the axis.
“All these projects are contractor funded, with structures that provide very beneficial payment terms that gives the state upfront value (front loaded) ahead of payments; thereby increasing the sustainability benefits to the state,” the Commissioner said.
While explaining the difference between the total budget size presented by the Executive and the final size passed by the Legislature, he said, “This difference is largely accounted for by the decision during the bilateral meeting with the MDAs to further accelerate already existing projects to bring them to substantial closure.”
