By Yusuf Ishaku Goje
Debt has become an integral part of our fiscal reality. The widening budget deficit due to dwindling revenues necessitates national and sub-national governments to borrow. Borrowing in itself is not bad, depending on its effective utilization and capacity to service it and pay back.
Kaduna State is one of the most indebted states in Nigeria. Whether there is commensurate value for money and return on investment in its utilization is left for residents of the State to judge. Interestingly, as at the 31st of December, 2023, the total Public Debt of the State was N460.9 billion.
This is made up of total External Debt of N380.6 billion and total Domestic Debt of N80.3 billion. While total Public Debt Service was N67.5 billion. A further breakdown of which shows total External Debt Service of N47.2 billion and total Domestic Debt Service of N20.3 billion.
A look at the Liquidity Ratio shows that Domestic Debt Service/IGR at 32.54% surpassed its sustainability threshold of 15%.
External Debt Service/Gross FAAC at 42.90% surpassed its sustainability threshold of 10%. Debt Service Deductions from FAAC/Gross FAAC was 0% below its sustainability threshold of 40%. While total Debt Service/Total Recurrent Revenue at 39.15% surpassed its sustainability threshold of 25%.
Likewise the Solvency Ratio shows that total Domestic Debt/IGR at 128.69% was below its sustainability threshold of 150%. Total External Debt/Gross FAAC at 346.22% surpassed its sustainability threshold of 150%. Total Public Debt/Total Recurrent Revenue at 267.44% surpassed its sustainability threshold of 150%.
That we have gone far above most of the sustainability thresholds is disturbing. More so, to better appreciate our predicament, the debt service of N67.5 billion in 2023 was 28.2% of total revenue (including Opening Balance), 29.28% of the total expenditure. Furthermore, it is 52.4% of capital expenditure, 66.2% of recurrent expenditure, 39.6% of recurrent revenue and it is higher than the total independent revenue of N62.4 billion.
It is public knowledge that the current administration seeks to borrow foreign loans of about N150 billion in 2024. If we get 100% drawdown, it will increase astronomically our debt burden. Therefore, the administration needs to ensure there is value for money for every kobo/dollar borrowed. The return of investment must be able to regenerate revenue to service and pay back in the medium to long term.
The Kaduna Internal Revenue Service (KADIRS) must be given all the required and requested support to meet and even surpass the N120 billion ambitious target for 2024. Anything short of this will throw the State into a debt trap that will hold down the current and future generations.
Wishing the current administration success as it navigates this maze..
Lets engage, ask the right questions and hold the government accountable.
Goje is an active citizen, civil society member and OGP enthusiast
