2022 Budget: Lagos defends N521b deficit financing
Lagos State government, yesterday, said its N521.27 billion deficit funding for the 2022 budget, at 21 per cent of debt service to total revenue, is within the fiscal sustainability benchmarks of 40 per cent.
Giving the breakdown of the 2022 appropriation bill of N1.7 trillion signed into law by Governor Babajide Sanwo-Olu on December 31, 2021, the Commissioner for Budget and Economic Planning, Mr. Sam Egube, said the state hopes to amass N980 billion through Internally Generated Revenue to finance the budget, with the state Internal Revenue Service expected to generate 73.5 per cent (N599, 04bn), while about 19.2 per cent (N156.65bn) is expected to be generated by other MDAs of government.
The Commissioner said the 2022 budget is a landmark budget in the history of the state both in its size and texture, with the approved budget of ₦1.758 trillion made up of ₦1.167 trillion capital expenditure and ₦591.281 billion recurrent expenditure, resulting in a capital to recurrent ratio of 66:34, which is strongly in favour of capital expenditure.
Egube noted that the overriding objective of the budget was to substantially complete existing and ongoing infrastructure projects.
He said: “Infrastructure is essential to statewide economic and social development. It is, therefore, important that we accelerate the completion of our ongoing projects to release the inherent value of the projects to the people of Lagos.
“This is especially important given that this is the last full year budget of this administration. Accordingly, we have increased our investment in infrastructure by 86 per cent over the prior year budget to N619 billion representing 35 per cent of the entire budget size.”
According to him, with the budget, the state hopes to complete eight stadia across the five Ibile divisions to facilitate youth development, engagement and community sports
“The construction of the six-lane reinforced concrete Lekki Epe express way from Eleko junction to Epe T-junction. This strategic project is aimed at accommodating the increasing huge and heavy vehicular movement in the Lekki Epe axis, especially when the deep seaport and the Dangote refineries et’al come into operation.
“Procurement of 62 fire vehicles to improve our fire response service all over Lagos by further decentralisation of operating locations all over the state. This will strengthen our emergency response capability.
“Construction of 130 bed New Massey ultra-modern and fit for purpose Pediatric programmed and emergency general hospital. We believe that when this hospital, which will be located at Lagos Island is completed, it will be the largest specialist children hospital in sub- Saharan Africa.
“Construction of the Opebi Link Bridge to Maryland that will improve significantly travel time and alternative route options the axis. All these projects are contractor funded, with structures that provide very beneficial payment terms that gives the state upfront value (front loaded) ahead of payments; thereby increasing the sustainability benefits to the state,” the commissioner said.
While explaining the difference between the total budget size presented by the executive and the final size passed by the legislature, he said: “This difference is largely accounted for by the decision during the bilateral meeting with the MDAs to further accelerate already existing projects to bring them to substantial closure.”
While giving the revised budget for 2021, the commissioner stated that out of ₦1.257 trillion budget size, there was total revenue of ₦984.573 billion and deficit financing of ₦271.994 billion.
He explained that as at November 30, 2021, the budget posted a performance of 73 per cent, adding Revenue Performance was 75 per cent, while Capital and Recurrent Expenditure performed at 65 per cent and 83 per cent respectively.
“The 65 per cent performance of Capex is the result of our closure of the 100 billion Bond transaction, which was oversubscribed in December 2021. As a result, we believe that Capex performance will close at about 85 per cent by December 2021. This, therefore, is expected to enable the state achieve a strong budget performance of about 89 per cent by year end 2021 despite the daunting challenges in the year,” he added.