Ogun State Government has allayed the fear of residents over the rising debt profile of the State, assuring that the State has the capacity to repay its debts.
The State Commissioner for Finance, Dapo Okubadejo who gave the assurance during the year 2024 budget breakdown and presentation said, there was no cause for alarm over the State’s debt profile, adding that the State has not exceeded its debt limit.
Residents of the State have been raising concern over the debt profile of the State which the Debt Management Office (DMO) put at N270 billion.
But, reacting to the concern, Okubadejo explained that the State has external debt of N55 billion, while the internal debt is N82 billion.
The Commissioner stated that 2024 budget of over N703 billion would have a significant and positive effect on the people of the State with a reasonable performance.
Okubadejo, who is also the Chief Economic Adviser to Governor Dapo Abiodun said, the State has been putting its loans into good use, saying almost 80 – 90 percent of its debts is used for financing capital projects.
Okubadejo, who was flanked by the Commissioner for Budget and Planning, Olaolu Olabimtan said an economically viable State such as Ogun has no reason not to repay its debts.
He said, “There is external debts of N55 billion, internal debts of N82 billion, some of these internal loans are also used for working capital requirement, but almost 80 – 90 percent of the debts 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 all within limit, far below even the limit of all the sustainability ratios of debts.
“If you are afraid to take 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 concern about the debt position in Ogun State, there is no cause for alarm, infact, we should all go and sleep because, not only are we very careful in the type of debt we take, 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 said the budget will be funded with Internally Generated Revenue (IGR) estimated at N240 billion.
The Commissioner explained that IGR remained a critical part that the state would use to fund critical development.
Okubadejo stressed that the State was one of the States in the country that rely less on Federal allocation, saying that there was need for the State to be economically and financially independent.
“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 development of the state,” he said.
Okubadejo noted that the State remained one of the fastest growing economy in the country, saying that the economy needs to be more robust in order for the State to achieve its goals.
