Lagos to raise N100bn bond to finance 2021 budget deficit

The Lagos state government says it will raise N100 billion through domestic bond issuance to fund the deficit in its 2021 budget.

Rabiu Olowo Onalapo, Lagos commissioner for finance, was speaking during a presentation of the state’s 2021 budget on Thursday.

The N1.16 billion budget has a deficit of N192.49 billion, N92.49 billion of which to be funded by both internal and external loans.

Onalapo said the debts are totally tied to capital projects adding that the state’s 19.8 percent debt to revenue ratio is projected to rise to 22 percent in 2021.

This, he said, remains below World Bank and federal government’s benchmarks of 40 percent and 30 percent respectively.

According to the budget breakdown, the total revenue estimate is N971.02 billion, consisting of internal generated revenue (IGR) of N723.81 billion; capital receipts (N71.81 billion); and federal transfer of N175.40 billion.

The Lagos 2021 budget is made up of N702.93 billion for capital expenditure and N460.49 billion for recurrent expenditure, implying 60:40 capital to recurrent ratio against 2020 budget which was at 55:45 capital to recurrent ratio.

The breakdown of Lagos recurrent expenditure shows that total personnel cost (N168.72 billion); total overhead costs (N260.07 billion); and debt charges (N31.87 billion).

Presenting the state’s budget for 2021, Samuel Egube, Lagos commissioner for economic planning and budget, said a significant percentage (N512 billion) of the projected IGR is expected to be contributed by Lagos state Internal Revenue Service (LIRS).

Babajide Sanwo-Olu, governor of Lagos, signed the 2021 Appropriation Bill into law on December 31, 2020.