Our Correspondent|29 May, 2018
The Cross River State Government has recently denied its 2016 debt profile as released by the Fiscal Responsibility Commission (FRC) in a recent publication made available to newsmen in Abuja.
The state government made the denial through a Press interaction released from the office of the Special Adviser on debt management to the government of Cross River state, Hon. Ajah Francis Ajah.
Although the state government accepted that it had a high debt exposure, but said what was released by the Fiscal Responsibility Commission (FRC) as published by Punch Newspaper on the 20th of March 2018 was an over exaggerated version of the state debt burden.
In the words of The Special Adviser, debt management, ‘we make bold to state that this publication is wrong in facts and contents and is capable of misleading and misguiding our investors and our populace. It is also dysfunctional approach of misinforming our numerous investors and development partners. As much as we will not join issues with the author and the publisher, we will responsively state our true position so as to enhance proper disclosure in line with current best practices and maintain appropriate financial and credit rating as a state with a potential economic growth’.
Hon. Ajah also revealed that ‘the Cross River state has a total land Area of 7,782 square meter with numerous economic potentials total debt to gross revenue % of 211% and excess of 150 % (not as quoted by Punch of 433 and share in total National % of 0.91’.
The finance expert noted that his office in collaboration with relevant MDA’s in the state are putting machineries to ‘maximize all available financial envelopes from both concessional and semi-concessional sources as well as managing all borrowings from multilaterals and bilateral sources which hitherto existed before the advent of this noble regime’.
Mr. Ajah who was recently appointed by the state Governor to manage the state’s debt matters noted that as a commitment on the part of the Sen.(Prof) Ben Ayade’s led government to reduce the state’s debt burden, the Governor has not borrowed from a Commercial Bank in a prevailing Monetary Policy Rate (MPR) since his took over governance of the state in 2015.
The release from the state debt management office reads in full:
‘According to a publication of Punch newspaper of Monday, March 20, 2018, the Cross River State Government total debt ratio is 940%, making it the third most indebted state in the Federation with Lagos and Bayelsa on top of the list.
Debt is money owed or being obligated by one willing party to another willing party. But in Public Finance it can best be regarded as the introduction of borrowings into the capital structure of a State or nation to achieve a sustained global economic growth, enhance the social well being of its or her citizenry, irrespective of any economic maladies and other bottlenecks.
Arising from the publication of Punch newspaper of Monday, March 20, 2018, where it was posted that CRSG total debt ratio is 940%, we make bold to state that this publication is wrong in facts and contents and is capable of misleading and misguiding our populace. It is also dysfunctional approach of misinforming our numerous investors and development partners. As much as we will not join issues with the author and the publisher we will responsively state our true position to enhance proper disclosure in line with current best practices. This is very vital to strengthen our financial and credit rating as a state with a potential economic growth.
However the CRS has a total land Area of 7,782 square meter with numerous economic potentials total debt to gross revenue % of 211% and excess of 150 % (not as quoted by Punch of 433 and share in total National % of 0.91
The Cross River State Government in line with the new debt management strategic policy, is greatly determined to continually maximize all available financial envelopes from both concessional and semi-concessional sources as well as managing all borrowings from multilaterals and bilateral sources which hitherto existed before the advent of this regime. This will make the state not be highly geared. This is evidenced by the fact that CRS Governor Senator (Professor) Ben Ayade who did not borrow any fund at all from any commercial bank in the Prevailing Monetary Policy Rate (MPR) since he assumed office as the Executive Governor of CRS in 2015.
His Excellency has also adopted a sophisticated and a programmatic approach to develop, coordinate and administer the state public debt with the view to transforming our debt portfolio into economic asset for growth in line with international best practices via the debt Management department. It will be noted that previous Governments in CRS engaged over N128b project-tied debt and trade related debt to enhance and improved the Cross River State Water Board (CRSWB), Tinapa Business Resort, International Convention Centre, Sectoral performances, economic growth and other allied developmental infrastructures of the State, The Government of Senator (Professor) Ben Ayade has also decided to adopt and adapt a prudent debt Management strategy to repay all our scheduled debts in line with the agreements, pricing requirements, repayment schedules, and ISPOs where necessary.
Hon. Ajah Francis Ajah (ACA) as the Special Adviser, Debt Mgt is mandated to utterly consider all available public sector debt risk, reduce the state debt exposure by enhancing debt indicators ratios in Cross River state. He is also admonish to use all available debt management strategies such as debt refinancing, rescheduling, repudiation, debt buy-back and possibly seek foreign aid to manage and bridge up our Cross River State Government funding gaps, while also avoiding any debt overhang’.
According to the 2016 Annual Report of the Fiscal Responsibility Commission (FRC) showed that debt exposure of three states comprising Lagos, Osun and Cross River States were between 480 and 670 per cent of their gross revenue.
According to the said publication by NBS, ‘the debt of most of states in Nigeria has exceeded 50 per cent of their annual revenues. The debt profiles of about 18 states exceed their gross and net revenues by more than 200 per cent. Lagos, Osun and Cross River states record over 480 per cent debt to gross revenue’.
The states with the highest debt to gross revenue ratios were Lagos (670.42 per cent), Osun (539.25 per cent), Cross River (486.49 per cent), Plateau (342.01 per cent), Oyo (339.56 per cent), Ekiti (339.34 per cent), Ogun (329.47 per cent), Kaduna (297.26 per cent) and Imo (292.82 per cent).
The debt to net revenue ratio of the states put some of the states in even more precarious situations. The debt to net revenue of Lagos, for instance, is 930.96 per cent, while that of Cross River is 940.64 per cent.
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