The foreign debt of the 36 state governments and the Federal Capital Territory (FCT) increased by 7.9 per cent year-on-year to US$4.25billion at the end of June 2018, Debt Management Office (DMO) data has shown.
The debt include all contracted concessional terms, and due to multilateral agencies other than borrowings of US$220 million by seven states from the agence française de développement (AFD), the French state development bank.
Lagos State tops the state debtors’ list, accounting for US$140m of the total loans granted by the AFD.
For the payment from July 2018 revenues, the gross statutory allocation of N5.0billion for Lagos became N2.2 billion after charges, while for Edo, the second largest external borrower, N4.9bn became N4.6bn. The deductions in the month for external debt service were N850m for Lagos and N70m for Edo.
While all borrowings are vetted by the Federal Government, there are variances in debt service capacity. Babatunde Fowler, head of the Federal Inland Revenue Service, noted in May that the internally generated revenue collected by Lagos was the equivalent of that raised by another 31 states combined. Lagos boosted its revenue excluding the statutory allocation by 13.2 per cent in 2017 to N369billion, according to its financial statements printed in the local media last month.
Some fiscal assistance is on its way. The federal finance ministry has announced the approval of a payment of US$2.68billion to the states as their final installment of the Paris Club “refund”. Local media accounts indicate that the payments will be subject to a number of conditions. The states must treat arrears on salaries and other personnel costs as a priority, and must pledge to start repaying their budget support loans granted in 2016.