21st May, 2018
By Kazeem Ugbodaga
The Lagos State Government on Monday said its current debt profile of NN874.38 billion is manageable and that the debt service charge to total revenue ratio is still within the World Bank threshold of 30%.
Commissioner for Finance, Akinyemi Ashade disclosed this on Monday at a ministerial press briefing in Alausa, Ikeja, Lagos, Southwest Nigeria.
According to Ashade, the Lagos State Government debt stock-to-GDP as at 2016 had been maintained at 2% from 2015, while reported total debt-to-total revenue in 2016 was 150% from 129% in 2015; both ratios being well below the World Bank thresholds of 40% and 250% respectively.
‘Our reported net debt stock, comprising of 48% local debt and 52% foreign debt, amounted to N874.38bn at the end of 2017, while the debt service charge to total revenue ratio, which stood at 17.61% compared to 13.32% in 2016 and 12.45% in 2015, is still within the World Bank threshold of 30%,” he said.
On the bond issuance programme, the commissioner said the government established a multi-year infrastructural development bond of N500 billion out of which the State had issued a cumulative amount of N132.14 billion, saying that the first tranche of N47 billion was issued in December 2016, while the second tranche of N97 billion was issued in August 2017.
“The sustained interest in the Lagos State Government Bond Issuance Programme is a confirmation of investors’ confidence in the State Government and its instruments. As at 28 February 2018, the State Government had accumulated over N36.7 billion in the Sinking Fund accounts managed by independent trustees towards the redemption of existing bonds, with the next set of bond tranches of N80 billion and N87.5 billion set to mature in November 2019 and 2020 respectively,” he said.
However, Ashade disclosed that the government had so far achieved an average monthly Internally Generated Revenue (IGR) of N34 billion in 2018 compared to monthly averages of the last three years.
Ashade attributed the gradual improvement to the impact of the ongoing reforms and growth in the State’s economy.
He said, “Notably, we are recording gradual improvement in our average monthly IGR in 2018 compared to the levels achieved in previous years due to the impact of ongoing reforms and growth in the State’s economy. Based on our first quarter results, Lagos State has so far achieved an average monthly IGR of N34billion in 2018 compared to monthly averages of N22bn, N24bn and N30bn in 2015, 2016 and 2017 respectively.”
The commissioner expressed optimism that the IGR would continue to rise even further as the State continues to implement the various reforms, driven by wider technology adoption and innovation, adding that the target to grow the State’s IGR to N50bn by next year was well on course.
“The target we set for ourselves is N50 billion but we all know the kind of push backs we have experienced including people going to court and all that. Our commitment is not for now, its for the future of Lagos. We know it’s a marathon, we would win some and we would lose some, but we are very committed towards ensuring that we meet the target, but if we don’t meet it this year, definitely there would be another year, but we believe we would succeed in that target we set for ourselves,” Ashade said.
On Federal Transfers, he said since Lagos joined the league of oil producing State, the Government had received a total of N327 million revenue, comprising N197 million and N130 million received in 2017 and first quarter of 2018 respectively.
“Furthermore, we are in ongoing discussions with the Federal Government towards obtaining a refund for expenditure totalling N51 billion that was incurred by the State Government on behalf of the Federal Government for infrastructure projects developments in the State. We are optimistic of successful discussions that will result in the approval and payment of the amount owed to the State Government by the Federal Government,” he said.
The commissioner said the State Government has continued to maintain a positive credit rating, however, adding that a downgrade of Nigeria’s sovereign rating would lead to a corresponding action on Lagos’ international drawing rights.
“As Nigeria continues to improve on its credit rating, we would be able to achieve better rating as we currently have because no amount of revenue generation, no amount of employment growth of Lagos State can make us surpass to surpass the sovereign rating,” he said.
He, however, said that the State Government has taken some strategic steps to help Nigeria improve on its ratings including adhering to fiscal discipline, improved revenue generation, reforms in infrastructure development, transport and embedded power.
Giving an update on the revised Land Use Charge (LUC), Ashade said the State Government has continued to engage critical stakeholders in line with its tradition of inclusive governance, adding that a wide range of response have been received.
He said the extensive discussions led to several concessions on Land Use charge for property owners across board, adding that a revised bill to further amend the LUC Law to incorporate the additional concessions was presently before the House of Assembly and would be passed soon.
Besides, the commissioner said the Government through the LUC Assessment Appeal Tribunal, received a total of 1,503 complaints, out of which 1,113 were successfully resolved administratively and through mediation, adding that an additional 263 property owners/agents had their grievances resolved in the last two weeks and more still ongoing.
Ashade also urged residents to continue to support the government by fulfilling their civic duty of paying their taxes and remitting all taxes collected on behalf of the Government as and when due, assuring that the present administration was committed to maintaining financial accountability and transparency for the overall development and prosperity of the State.