Ogun State has been rated by the Fiscal Responsibility Commission as having one the country’s highest debt to gross revenue ratio as at December 2016.
The commission in its 2016 annual report, rated Ogun State as the seventh of such states.
Topping the list is Lagos State which recorded 670.4 per cent debt to its gross revenue ratio, followed by Osun State (539.2 per cent), Cross River (486.4 per cent), and Plateau (342.01 per cent).
Others are Oyo State with 339.56 per cent debt to gross revenue ratio, Ekiti (339.34 per cent) and Ogun with 329.47 per cent to its gross revenue ratio.
According to the guideline provided by the Debt Management Office (DMO), the debt ratio to a state’s gross revenue must not exceed 50 per cent.
The report, however, explained that because a state’s debt exceeds 50 per cent of its gross revenue does not mean it has over borrowed.
The report stated that, “It should be noted that the fact that some states exceeded the threshold of 50 per cent of their total revenue is not an indication that they over-borrowed as the debt limits of the governments in the federation are yet to be set.
“Furthermore, only total revenue is used for the foregoing analysis as comprehensive data on the states’ Internally Generated Revenue were not available. In any case, the IGR on the average is not more than eight per cent of the states’ total revenue except for Lagos State. In essence, the non-inclusion of the IGR may not distort the result of the analysis.
“Therefore, there is a need for each of these states to work towards bringing their respective consolidated debts within the 50 per cent threshold of their total revenue in order to guarantee a general public debt sustainability in the country.”Please subscribe to our newsletter