Monday 1 June 2015

Ambode Inherits N418.2b Debt Burden From Fashola's Administration

As he officially resumes work today, the new governor of the State, Akinwunmi Ambode, is inheriting a debt burden of N418.2 billion from the outgoing administration.
The debt burden, though accompanied with a repayment plan lasting 40 years plus, is an astronomical increase from the N15 billion Babatunde Fashola (SAN) inherited from his predecessor, Asiwaju Bola Tinubu, in 2007 when he took over.

A breakdown of the debt bequeathed to Ambode showed that the Fashola administration has a domestic debt of N69.666 billion, which it obtained from borrowing from banks; N225 billion from bond issuance and N207.499 billion 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.
Commissioner for Finance, Ayo Gbeleyi said government’s huge debts were 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 per cent of total revenue with Statutory Allocation plus Value Added Tax (VAT) being about 35 per cent.
Gbeleyi stated that 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 cent 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, he disclosed that government had over N100.73 billion as at March 2015 in its Sinking Fund reserve for repayment.
On the Commercial Bank debt of N69.666 billion, Gbeleyi added that 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 the commissioner, is 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.
Meanwhile, there are indications that Ambode will streamline operations in the state to reduce the cost of governance.
Besides, the governor has hinted that he would be residing at the Lagos House, Ikeja, to help him resume work and be available from 8am daily.
Speaking in his inaugural meeting with the Body of Permanent Secretaries in the State Public Service at the weekend, Ambode said though new offices would be created, the present ones would be streamlined in order to ensure that cost of governance is reduced while ensuring greater efficiency.
Some agencies, according to him, would be returned to their original supervising agencies to ensure that the control, which used to be in place for those agencies returns.
He noted that part of his speech at Friday’s inauguration ceremony already dwelt on the creation of a Ministry of Wealth Creation that would ensure that not only does his administration create wealth, but also ensures that when investments from foreign sources drops, a pro-active situation is in place to take care of them.
The governor added that since the All Progressives Congress (APC) has already formed a government at the centre, investments are also bound to come from the centre, saying when such investments come, the state should have a front desk office that would attend to such people bringing in the investments and people with interest.
Harping on a revisitation of ministerial responsibilities of all ministries, departments, and agencies, he said that the ministerial responsibilities were last reviewed in 2001.
Ambode stressed that he would saddle the Body of Permanent Secretary with the task of taking a look at the draft, which the administration of Babatunde Fashola (SAN) could not conclude, urging them to work on such drafts to fit into his vision.
He added that he would ensure that Permanent Secretaries exercise the authority that comes with their positions efficiently and ensure that each officer works for the position he has attained.
The governor insisted that his latest pronouncements were not about reinventing the wheel but about his taking full advantage of the experience he had garnered while in the public service of the state.
While advising the public servants to align with his administration, Ambode said he expects all public servants to also be at their desk by 8am so that if he has cause to get in touch with anyone, they would be readily available.
He said he expects the protocol of his administration to be as simple as possible to convey the essence of seriousness and professionalism that would be the hallmark of the administration.
The governor reiterated that the state civil service would drive the change and the continuity, which he intends to put in place in the next four years.
The post Ambode inherits N418.2b debt burden appeared first on The Guardian Nigeria.
Via: The Guardian

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