The Ogun State Government has allayed the fears of residents who are raising questions over the skyrocketing nature of the state’s debt profile.
The government has asserted that it can repay its debts.
The state government gave this assurance through Commissioner for Finance Dapo Okubadejo, who spoke at the 2024 budget breakdown presentation on Monday.
Okubadejo said the state government has not exceeded its debt limit.
Residents and political watchers in the state have been raising concerns over the debt profile of the state, which the Debt Management Office (DMO) put at N270 billion.
Reacting to the concern, Okubadejo, who is the Chief Economic Adviser to Governor Dapo Abiodun, said: “There are external debts of N55 billion and internal debts of N82 billion. Some of these internal loans are also used for working capital requirements, but almost 80 – 90 per cent of the debt is for funding capital expenditure that will increase the revenue capacity and the economic base of the state.
“As practical as possible, we look for cheap debts and we are all within the limit, far below even the limit of all the sustainability ratios of debts.
“If you are afraid to take a loan, then you are not improving the economic base. If we get cheap debt, it is going to be used to fund infrastructure, and we have the capacity to pay it.
“People are always very concerned about the debt position in Ogun State, there is no cause for alarm, in fact, we should all go and sleep because not only are we very careful in the type of debt we take, but we are also judiciously utilising the debt for capital infrastructure that will increase our revenue and improve the economic base and we have the capacity to pay back.”
Also speaking on how the 2024 budget will be financed, Okubadejo stressed that the state has projected to fund the sum of N240 billion from the over N703 billion of the state budget for 2024.
Okubadejo added: “We are projecting N240 billion from our internally generated revenue this year. We are one of the states that is less dependent on federal allocation.
“We have to be economically and financially independent as a state. The execution of the 2024 budget is critical to us. Our revenue in the state is increasing while our debt profile is decreasing. The debt is used to fund capital expenditure that will improve the development of the state.”
