Monday, September 28, 2020  / 10:20 AM  /ByFBNQuest Research  / Header Image Credit: FBNQuest 

Thetotal indebtedness of state governments at end-June amounted to US$15.09bn,equivalent to 10.5% of GDP. (We have converted the larger, naira element at thefx rate at the I&E window.) The domestic/external mix was 72/28 atend-June. The external borrowing was unchanged over 12 months because it is allguaranteed by the FGN, which has become concerned about the repayment capacityof most states. The domestic borrowing increased by just 5.6% over the sameperiod, and is subject to tighter regulation by public agencies including theDMO and the Securities and Exchange Commission.

The five largest debtors at end-June were Lagos, three oil-producingstates and Kaduna, which has a reforming administration and a governor highlyregarded by Nigeria's official creditors. After Lagos, Kaduna has by far thehighest external debt among states.

The average indebtedness of the remaining 31 states and the FederalCapital Territory at end-June was US$303m. The least indebted was Yobe(US$101m). 

As with external borrowings, Lagos State is the largest domestic debtorin terms of bank borrowings and bond issuance (see below). Its accounts for2019 tell us that it is well placed to meet its obligations. We see totalrevenue of N645bn, in which internally generated revenue (N348bn) comfortablyexceeded statutory allocations from the Federation Account Allocation Committee(FAAC) of N230bn. It managed to post an overall surplus of N67bn after capitalitems, depreciation and public debt service (N63bn).

This data series excludes the issuance of naira-denominated bonds, whichcurrently amount to N378bn in total. Lagos alone accounts for N328bn and is thelast state government to have come to the market (several times) since CrossRiver in May 2015. Coupon and principal repayments are deducted from themonthly distributions by the FAAC.

Related News

1. New Issuance, New Debt Service
2. External Debt Almost Two-thirds Concessionary
3. Nigeria's Total Public Debt Stood At N31.01trn in Q2 2020 - NBS
4. Nigeria's Public Debt Stock Stood At N31.01trn As of June 2020
5. External Debt Stock Flat in Q1 2020
6. Q1 2020: Debt Service Settled on a Plateau
7. Nigeria's Total Public Debt Stood At N28.63trn in Q1 2020 - NBS
8. Nigeria's Total Public Debt Stood At N27.40trn in Q4 2019 - NBS
9. Nigeria's Rising Debt Burden and How to Boost Revenue
10. Nigeria's Total Public Debt Stood At N26.14trn in Q3 2019 - NBS
11. Nigeria's Total Public Debt Stood At N25.70trn in Q2 2019 - NBS
12. Nigeria's Total Public Debt Stood At N24.97trn in Q1 2019 - NBS
13. DMO Releases Q1 2019 Public Debt Data - Marginal Increase of 2.3% in Total Public Debt Recorded
14. DMO Releases Public Debt Data for December 2018
15. Nigeria's Total Public Debt Stock Stood At $73.21bn or N22.43trn in Q3 2018
16. DMO Releases Public Debt Data for June 2018; FGN Domestic Debt Declines
17. Public Debt Vulnerable to Exchange Rate Movements
18. DMO Publishes Q1 2018 Debt Data; Total Public Debt Stood At N22.71trn or US$74.28bn
19. Total Public Debt as at December 31, 2017 Represents 18.20% of Nigeria's GDP for 2017 - DMO
20. Nigerian Public Debt - A Comparative Analysis

Related News - State and Local Govts

1. Stakeholders Urge Sub-Nationals To Rethink Strategies for Fiscal Sustainability
2. 2020 State of States Report: Osun, 12 Others Lack Revenue Capacity to Fund Recurrent Expenditure
3. FAAC Payout Well Short of States' Needs
4. RMAFC Emphasise Need for Sub-nationals to Improve IGR
5. Unemployment - Sub-Nationals in Focus - Imo State Records Highest Unemployment Rate of 48.7%
6. Heavy Weight of State Government Debt
7. IGR Still in Need of a Boost
8. Coronanomics (18) - Selected Sub-Nationals: The Different Faces of Trouble and Redemption
9. Coronanomics (17) - Sub-Nationals: Digging Deep, Wide and Hard
10. No Respite for State Government Finances