22 October 2017

Nigeria: Osun Groaning Under Huge Debt Criticises BudgIt Report On Finances

The State Government of Osun has alleged that the report by BudgiT, a technology-based transparency and accountability organization, on its debt profile and financial situation is inaccurate.

BudgiT in its recent report titled "State of States; an analysis on states domestic and external debt," said Osun's debt situation was worrisome.

It stated that the state was heading towards insolvency because of the huge debt of the state amounting to N52.56 billion.

BudgiT chided the state government for obtaining loans for projects that did not add to or improve the Internally Generated Revenue (IGR) of the state for the smooth refund of the loans.

"The State received N123.59billion in bailout funds - the biggest in contemporary Nigerian history," the report stated.

"Osun's spending plan over the years came with the borrowing of N18.38 billion to build six mini-stadia to amuse, and at best make its youthful population active.

"Also borrowed was N30 billion at a lending rate of 14.75 per cent, for roads and waterworks infrastructure which generate no income and therefore cannot provide for long-term sustainability repayment plans.

"Another N11.4 billion was borrowed at a 14.75per cent lending rate to build schools, which would also unfortunately bring in no income into the State's coffers. Even more debilitating to Osun's economic prospects was that the repayments for all these debts ran concurrently, and deductions were made out of whatever revenue was to accrue to Osun State.

"Taking these loans which did nothing to improve Internally Generated Revenue amid large Overhead costs means the bulk of the State's existing revenue is instead diverted into debt repayment.

"Total personnel costs which hitherto stood at N16.8billion in 2011 when government revenue was N54.8billion, have increased astronomically to N32.4billion, N42billion and N48billion in 2012, 2013 and 2014 respectively.

"Osun's revenue, padded with savings from the fiscal buffer that is the Excess Crude Account (ECA) rose to N55.96 billion in 2012, hitting a high of N61.89 billion, before falling back to N57.1 billion in 2014. However, N4.84 billion, N2.87 billion, N8.5 4billion and N12.65 billion was deducted at source to cover the State's liabilities in the year 2011, 2012, 2013 and 2014 respectively."

But a statement by the Commissioner for Information and Strategy, Adelani Baderinwa, on Sunday said the report was a gross misrepresentation of facts and a narrow view of the economic importance of the massive infrastructural projects funded with the loans, and the laudable economic policies of the Governor Rauf Aregbesola's administration.

"The BudgiT report, with all economic and financial indicators is incorrect, short of expectation from a respectable and objective organisation and total disregard to reports of other national and international organization on the true situation of the state of Osun," the statement said.

"BudgiT did not take into cognition, the report of the National Bureau of Statistics which described Osun as the second economic development state after Lagos in the South-West, and the markedly economic improvement differences before and during the Aregbesola's administration."

The commissioner noted that early in October, The United Nations' Global Multi-Dimensional Poverty Index ranked Osun second richest state in Nigeria, adding that the Renaissance Capital, a leading emerging markets investment bank in Africa, revealed that Osun, Ekiti, Lagos and Oyo states were the leading economies in Nigeria.

"Osun debt profile is put at N179 billion by the NBS. The loan is still within the capacity of the government to access and pay back in a normal economic situation and government has indeed been servicing its debts without public knowledge before the Peoples Democratic Party induced economic recession," he said.

"The loans obtained by the Aregbesola's administration have been prudently and judiciously used for the transformative development that is evident in every part of the state."

Mr. Baderinwa further argued that most successful governments in other parts of the world achieve development and great dynamic society through the aid of loans and other financial facilities which they put to good use.

"China and U.S.A that are the most developed economies in the world and are incidentally countries with highest debt profile which indicated that as rich as they are, their resources seem not enough for their development plans, thereby resorting to loans," he argued.

"The administration of Governor Rauf Aregbesola as a visionary, prudent, accountable and proactive one took the loans to finance rapid development of infrastructure that made Osun a reference point and cynosure of good governance in the land.

"May we note that with the new look that the state is carrying today in terms of infrastructure and socio-economic development by which many accolades had been poured on the government of the State of Osun led by Ogbeni Rauf Aregbesola at national and international levels, and the facts that many of its projects have been copied at national and international levels, commendation is what should be showered on the government by the people as they often do.

"The steady investment in infrastructural development like dual carriage roads, power, hospitals and education among others contributed to the growth in the GDP of Osun.

"In conclusion, the BudgiT report on Osun financial situation is far from the truth, inaccurate and we reject it in entirety."


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