States groan under declining revenue allocation as debt to CBN crosses N1tr

States in Nigeria are in dire strait and desperately looking for means to pay salaries and cover budget expenses amid dwindling allocation from the federation account.

Latest data from the Central bank of Nigeria showed that states debts have increased to N1.24 trillion from just over N14 billion in April 2016.

The yearly breakdown of debts shows that states as at December 2016 had a debt stock N300.38 billion and N590.42 billion the following year.

States’ debt to the CBN declined gradually to N600.62 billion in October 2021 from N614.92 trillion in September 2019, but rose to N700.47 billion in December last year.

However, the CBN latest data revealed that the debt had increased to N1.24 trillion in June this year.

The states’ increased borrowings followed dwindling FAAC disbursement to states, which according to the National Bureau of Statistics dropped from N640.16 billion in Q4 2021 to N590.45 billion in the first quarter of this year.

Aside from CBN, the states are also indebted to domestic investors including banks.

The Debt Management Office (DMO) in March reported that the states’ debt stock stood at N4.84 trillion.

Lagos, Ogun, Rivers, Imo, and Akwa Ibom are the five most indebted states with N1.65 trillion which is over a third of the domestic debt.

The DMO data showed that Lagos, with a total debt of N780.5 billion as of March is the most indebted state in Nigeria with 16.26 percent of the subnational debts.

Ogun followed with N242 billion while Rivers Imo and Akwa Ibom had N225.5 billion, N204.6 billion, and N203.1 billion respectively.

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