How does Cross River intend to finance its staggering N1.3trillion budget?

by Ajadi Daniel

It is perhaps no news that states in Nigeria are used to preparing budget that they do not have the financial capacity to implement.

It might be difficult to entirely avoid deficit when planning a budget, but states in Nigeria are becoming too comfortable with this tradition especially when it is obvious that they lack the administrative and fiscal capacity to make this deficit work in their favour. States with deficit most times have very poor Internally Generated Revenue, and only very few have come out with cost cutting and investment initiatives that will help transform the deficits into surplus. Rather than do this, they stubbornly continue with the budget, leaving most of the projects uncompleted, some are not even started at all, and they keep repeating them in subsequent budgets.

And those that are serious about implementing plunge their states into deeper debt. To repay this loan will depend on the quality and capacity of that project to pay back as well as financial discipline of the present and subsequent government. Unfortunately, TINAPA in Cross River does not fall into the category of such project.

The International Centre for Investigative Reporting clearly stated in a special report on states budget that all the states that have presented their 2018 budgets have a deficit but some states have taken theirs to absurd and unrealistic level.

 A good example of that is the Cross River state’s N1.3 trillion budget of Kinetic Crystallization. There is definitely no how the state led by Ben Ayade will implement such budget without selling off the state into huge debt, a state whose 2017 budget was N307 billion!

The question is how does the governor intends to implement this budget, especially if he cannot state categorically that the 2017 budget which was N307bn was fully implemented even with huge internal and external debt incurred. TINAPA presently is languishing away in waste, the state is more of a civil service state apart from the few resorts. The point is that the cross river economy is not buoyant enough to generate enough capital to finance its budget, the private sector still remains small compared to the public sector.

Read also: On the states budget of hypocrisy, PR stunts and deficits (see figures)

Cross River’s external debt at the end 2017 is $167.9 million, while her domestic debt stands at N125.65bn. The Federal allocation accruing to the state in 2017 was N23.45 billion. The state’s IGR in 2017 was N18.104 billion. So her IGR and federal allocation is not at all sufficient to finance a quarter of her budget. The state is not an oil producing state. Hence the numbers are staked against that budget. The only way would be to go for loan both domestic and foreign. The budget is definitely unrealistic and unrealisable. Here is another reason, the total federal allocation Cross River has received in ten years, from 2007 to 2017 is N411billion. Compared to Lagos whose budget is N1.046trn, Lagos has an IGR of N333.97bn in 2017, the private sector in Lagos is far larger than the public sector. So we have to answer the question, it will be that the state intends going on a borrowing spree, thus further worsening the debt situation of the state.

LEAVE A REPLY

Please enter your comment!
Please enter your name here