Debt of states in Nigeria has increased- W’ Bank

World Bank has disclosed that the
fiscal deficit of states in Nigeria increased
significantly from an estimated 0.2 percent
of GDP in 2014, to 1 percent in 2015 and
2016. This was part of statement released in
Abuja yesterday. The global apex bank also,
said that total state debt increased from 2.4
percent in 2014 to 4.0 percent of GDP by
the end of 2016. The states’ fiscal crisis led
to two sets of financial assistance packages
by the Federal Government. The second—
the Budget Support Facility (hinged on a
22-point Fiscal Sustainability Plan)—was
advanced in mid-2016 and due to close in
mid-2017.
“In light of the continuing fiscal pressures,
there is a strong need to strengthen the
performance of the states through the full
and sustained implementation of reforms
to increase internally-generated revenues
and state spending efficiency, and to
strengthen state debt management and
fiscal transparency,” said Ulrich Bartsch,
World Bank Lead Economist for Nigeria.
Nigeria’s GDP expanded by 1.4 percent in
the third quarter of 2017 (year-on-year), the
second quarter of growth after the recession
of 2016, reflecting recovery in oil production,
good performance in agriculture, and
stronger non-oil industry growth due to the
easing of foreign exchange constraints. Yet,
many fiscal challenges remain at different
levels of government, and effort is needed
to successfully address those, according to
the World Bank’s Nigeria Economic Update,
released today.
The new Nigeria Bi-Annual Economic
Update has a special focus on the analysis
of fiscal performance of Nigerian states.
With the shortfall in revenue, fiscal pressure
persists at subnational government levels,
putting a strain on service delivery.
While all states have made progress on the
reform measures included in the 22-point
Fiscal Sustainability Plan, implementation
is incomplete. The need to strengthen fiscal
performance through sustaining the state
fiscal reforms that have been accelerated in
the past 2 years is of paramount importance.
This aside, the most recent World Bank
2018 ‘Doing Business’ report highlighted
improvements in Nigeria’s investment
climate, and in its efforts to continue to
diversify the government’s sources of
revenue.