Debt Profile: Govt Slams BudgiT Over Inaccurate Analysis

By Kehinde Ayantunji

The Government of the State of Osun during the week slammed the BudgiT, for inaccurate and false presentation of the state debt profile and downplaying the government developmental project by distorting its economic and revenue prospects.

BudgiT, a budget and financial non-governmental  organisation  in its recent report titled “State of States; An Analysis on States Domestic and External Debt,” alleged that Osun debt profile is worrisome; adding that the state obtained loans for projects that could not improve the Internally Generated Revenue (IGR) of the state for the smooth refund of the loans.

In a swift response to the report, the Commissioner for Information and Strategy, Mr. Adelani Baderinwa, said the BudgiT report lacked the economic and financial depth expected from any professional.

He said the report was a gross misrepresentation of facts and misconception of the economic importance of the massive infrastructural projects funded with the loans, and the laudable economic policies of the Governor Rauf Aregbesola’s administration.

According to him BudgiT report with all economic and financial indicators was incorrect, short of expectation from a respectable and objective organisation and total disregard to reports of other national and international organisation on the true situation of the state of Osun.

BudgiT in the report claimed that the state government received N123.59billion in bailout funds – the biggest in contemporary Nigerian history and also borrowed N30 billion at a lending rate of 14.75 per cent, for roads and waterworks infrastructure which generate no income and therefore cannot provide for long-term sustainability repayment plans.

“Another N11.4 billion was borrowed at a 14.75per cent lending rate to build schools, which would also unfortunately bring in no income into the state’s coffers. Even more debilitating to Osun’s economic prospects was that the repayments for all these debts ran concurrently, and deductions were made out of whatever revenue was to accrue to the State.

“Taking these loans which did nothing to improve Internally Generated Revenue amid large Overhead costs means the bulk of the State’s existing revenue is instead diverted into debt repayment. Total personnel costs which hitherto stood at N16.8billion in 2011 when government revenue was N54.8 billion have increased astronomically to N32.4billion, N42billion and N48billion in 2012, 2013 and 2014 respectively.

It stated that the state was heading towards insolvency because of the huge debt of the state amounting to N52.56 billion.

The commissioner however explained that  BudgiT did not take into cognizance, the report of the National Bureau of Statistics which described Osun as the second economic development state after Lagos in the South-West, and the markedly economic improvement differences before and during the Aregbesola’s administration.

He said, “while acknowledging that a Non-Governmental Organisation may not have access to all necessary information needed for an analysis of this nature, the public would expect that the analysts would review and consider the reports of other national and international organisations who have done a detailed review and analysis of the true situation of the State of Osun. For completeness, a visit to the State would not be out of place especially if there is a gap in the information available to the analysts.

“Early this month, The United Nations’ Global Multi-Dimensional Poverty Index ranked Osun second richest state in Nigeria. Also, the Renaissance Capital, a leading emerging market investment bank in Africa, has revealed that Osun, Ekiti, Lagos and Oyo states are the leading economies in Nigeria. It is worthy to point out that these ratings are possible because of the social and economic value of the various investments the state has made.”

“Rapid development in any economy would be extremely difficult without an infusion of debt particularly for a state that has been slow to catch up with the standard of development in the South West.

“Osun debt profile is put at 179bn by the NBS. The loan is still within the capacity of the government to access and pay back in a normal economic situation and government has indeed been servicing its debts before the Peoples Democratic Party induced economic recession. The loans obtained by the Aregbesola administration have been prudently and judiciously used for the transformative development that is evident in every part of the state. It would have been challenging to achieve this level of infrastructure development especially at this time of recession and stagflation. The current valuations of these infrastructures are far in excess of their original cost which is another testimonial of the visionary leadership of Ogbeni Rauf Aregbesola.

“It is important to bring to fore the cases of China and U.S.A that are the most developed economies in the world and are incidentally countries with highest debt profile which indicated that as rich as they are, their resources seem not enough for their development plans, thereby resorting to loans. UAE has also achieved its level of development as a result of massive investment in infrastructure funded in part by debt.

“The administration of Governor Aregbesola as a visionary, prudent, accountable and proactive one took the loans to finance rapid development of infrastructure that has made Osun a reference point and cynosure of good governance in the land.

“May we note that with the new look that the state is wearing today in terms of infrastructure and socio-economic development by which many accolades had been poured on the government of the State of Osun led by Ogbeni Aregbesola at national and international levels, and the facts that many of its projects have been copied at national and international levels, commendation is the least that should be showered on the government by the people as they often do.

“The steady investments in infrastructure development like dual carriage roads, power, hospitals, education and security among others have contributed to the growth in the GDP of Osun and are expected to present the State as investment ready State and high on the league table of Ease of Doing Business.

“The vision of this administration is to make the State the best place in Nigeria to live, do business and recreate in no distant time. A State that was asleep as early as 6pm in 2010 is fast becoming a State where commercial activities take place for 20 hours in a day”, Baderinwa said