Politics
Lagos embarks on reckless spending in 2025 budget

…as deficit rises to N1.1 trn, recurrent cost doubles capex
Lagos State’s 2025 budget shares a lot of similarities with the federal budget in terms of its profligate spending. Unlike most states, which adopted a high level of fiscal responsibility based on zero deficit and are capex-focused, Lagos state reflects a propensity, as if money is not a problem but how to spend it.
The budget lacks fiscal discipline in spite of its massive size, which tends to hide and conceal the humongous recurrent nature that defeats the purpose. The budget of N3.7 trillion is more than those of several different geo political zones combined. Yet its recurrent nature may make it less impactful on the life of citizens than that of other states with a capex-focused budget of over 80 percent even with far less budget size.
Although the budget size is N3.7 trillion, the actual revenue expected is N2.6 trillion, while total recurrent expenditure is N2.2 trillion, with only N400 billion as a balance surplus from the actual revenue of the state. The rest is N1.1 trillion, which is a deficit to be financed with debt. Already, the state’s debt stock is N120 billion, which will increase to more than a trillion with this budget.
Again, the budget makes provision for N408 billion as a deficit, but the actual revenue shortfall is over N908 billion. The state’s proposed budget of N3.7 trillion, with a proposed revenue of N3 trillion, and actual revenue of N2 6 trillion, is actually a well-crafted deception. Between the proposed budget of N3.7 trillion and actual revenue of N2.6 trillion is a deficit of N1.1 trillion.
However, the allocation of N722 billion as Overhead cost, besides Personnel cost, is questionable as it constitutes a piggy bag for all sorts of hidden expenditures and a veritable source of corruption and misappropriation. Without clear and specific subheads, any spending under it cannot be tracked.
It is baffling how a budget that was increased by almost 100% should still contain such a huge deficit of about N1 trillion, which is a third of the total budget in addition to the N120 debt.
The implication of this is that, like the federal government budget, the Lagos state budget is actually heavy on recurrent spending with only a third of it for capital projects, which is still based on deficit. A further implication is that while the government will have all the money to spend on recurrent costs and the nebulous Overhead cost, capex, which impacts directly the lives of citizens, is dependent on expected revenue from borrowing.
Furthermore, Lagos is the only state in the country, which has a recurrent expenditure that is not only more than the capex, but twice more. It should be a real concern to Lagosians, who are paying through their noses to produce the Internally Generated Revenue, IGR, of almost N2 trillion, only to have a miserable half of it spent on their welfare. Again, with only a paltry N364 billion on personnel cost, the question is, where did all the money in the recurrent cost of over N2 trillion go?
With a recurrent expenditure of about N2.1 trillion and a deficit of about N1.2 trillion, the 2025 Lagos budget does look as big, good, and promising as it appears.