Lagos Says Its N435 Billion Debt Is Below Borrowing BenchmarkLatest News, News Tuesday, January 28th, 2014
Ayo Balogun, Lagos
The Lagos State Government on Tuesday says its current debt profile as at the end of 2013 is now N435 billion, saying it is still well below the international borrowing benchmark adopted by the Federal Government.
Lagos State Commissioner for Finance, Mr. Ayo Gbeleyi, who disclosed this in Lagos, Nigeria at the presentation of the 2014 budget analysis by the Ministry of Economic Planning and Budget, said the acceptable international benchmark adopted by the Federal Government Debt Management Office is 40 percent.
“With regard to our total debt stock today, we have about N435 billion, which is a net of N98 billion in sinking fund. To speak to sustainability of that figure, in terms of our total debt value, that is cost of loan repayment and interest to our revenue, that figure is about N13.15 percent.
“The acceptable international benchmark adopted by the Federal Government Debt Management Office is 40 percent. We are well below that benchmark. In 2013, we were about 13.15 percent and the benchmark is 40 percent. Our total public debt stock to GDP stood at 2.98 percent in 2013.
“For a frontier economy like ours, the threshold that is allowed is about 20 percent. As at last year, the ratio of our debt to total revenue is 112 percent. That is total debt stock at the percentage of revenue. That is 112 percent compared to the benchmark. The benchmark allows us to borrow up to 250 percent of our total revenue.
“Again, we are well within that threshold. The last threshold is also regulated by the Federal Ministry of Finance under the Fiscal Responsibility Act. We are allowed to borrow up to 50 percent of our last three years revenue. As at today, we only borrow 40 percent of that threshold. So, it all gives parameter of international benchmark that measures our debt level. They are very sustainable and responsible. Let me add that we have three international and local agencies that have rated not just the state government, but also our bonds,” he explained.
According to Gbeleyi, over the years, the government had always been notching up in its bond rating, saying that the most recent rating was 2013, saying that “our Agusto rating was, at a stage, A+ by Global Credit Rating; it was also AA+ by Fitch Rating International, our foreign currency long-term rating was AA positive and then our long-term national rating was BB minus able.”
He said when compared with the ratings of some countries like Angola, Nigeria is better, adding that “in 2013, our bond rating by Agusto was AA+ and the same thing with GCR. Of course, Fitch did not rate our bond. Those are the key measures and parameters of our debt profile as it stands today.”
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