Exclusive: Ambode To Inherit N418.2 Billion Debt Burden From Fashola

Posted by African Examiner Exclusive Reports, Featured, Latest Headlines, News From The State Sunday, May 3rd, 2015

By Ayo Balogun, Lagos – Incoming Governor of Lagos State, Mr. Akinwunmi Ambode is to inherit N418.2 billion from Governor Babatunde Fashola, African Examiner authoritatively reports.

In 2007 when Fashola took over from his predecessor, Asiwaju Bola Tinubu, he inherited just N15 billion from him, but he is bequeathing on his successor a whooping N418.2 billion.

A breakdown of the debt burden Ambode is about to inherit from Fashola showed that the Fashola administration has a domestic debt of N69.666 billion which it obtained from borrowing from banks; N225 billion debt from bond issuance and N207.499 billion from external loan from foreign bodies.

But the Lagos State Government is quick to defend its position, saying its debt profile is sustainable quoting Agusto and Co, Global Credit Rating, GCR, and Fitch Ratings to justify its position on the debt sustainability.

At a recent news conference, Commissioner for Finance, Mr. Ayo Gbeleyi said government’s huge debts are sustainable as it would not constitute a burden to the incoming government.

He said the total revenue of the state government currently stood at N33.95 billion monthly from N27.82 billion monthly it used to be in 2011 as the state’s Internal Generated Revenue, IGR, averages 65% of total revenue with Statutory Allocation plus Value Added Tax, VAT being circa 35%.

The commissioner said the internal loans from Commercial Banks have tenors of four to six years, while the Multilateral Agency Financing-World Bank, French Development Agency and others, are generally on concessionary borrowing terms, such as 20 – 40 years tenor and average of 1.75% per annum interest rate

On the Debt Issuance Programme of N275 billion, in which N50 billion was paid last year, leaving a balance of N225 billion currently outstanding, Gbeleyi said government had over N100.73 billion as at March, 2015 in Sinking Fund reserve for repayment.

On the Commercial Bank debt of N69.666 billion, he said the incoming government is expected to pay N14.27 billion this year; N13.68 billion in 2016; N34.68 billion in 2017 and the balance of N6.85 billion in 2018.

On the overall loan of N418.2 billion, the mode of payment, according to Gbeleyi disclosed that the Ambode government would pay N15.96 billion in 2015; N16.796 billion in 2016; N48.57 billion in 2017 and N10.644 billion in 2018, while the next government after Ambode in 2019 would service the remaining debt by paying N59.313 billion in 2019; N86.54 billion in 2020 as the remaining N180.397 billion would transcend beyond 2020.