© 2019 - International Centre for Investigative Reporting
N1.1 trillion: The unrealistic 2020 budget of ‘Olipotic Meristemasis’ of Cross River State
GOVERNOR Ben Ayade of Cross River state has presented an appropriation bill of N1.1 trillion for the 2020 fiscal year despite the obvious dwindling revenue.
The governor who is known for proposing unrealistic budgets in past years, while presenting the 2020 budget proposal disclosed that the budget has a capital expenditure of N911 billion, representing 82.8 percent and a recurrent expenditure of N188 billion, representing 17.2 percent of the aggregate budget. The Governor is of the belief that the budget will be anchored on a spiritual force.
How unrealistic is this budget?
In 2018, the total revenue for the state was N54.4 billion, a paltry 4.2 percent of the entire budget size of N1.3 trillion. The state received N36.95 billion from the federal allocation account and tried to generate just N17.55 billion internally. With this, the state in 2018, had a budget deficit of about 95.8 percent. The narrative is yet to change in 2019.
For 2019, the governor signed what he tagged the budget of qabalistic densification of about N1.043 trillion. However, what the state has raked in as its revenue as of June 2019 is just about N33. 97 billion, with a projection that it may not rake in more than N80 billion as its revenue at the end of the year.
In the past 10 years, from 2009 to 2018, Cross River State has only received N377 billion from the federation account allocation and generated N128.6 billion internally, totaling N505.6 billion. Therefore, if the state borrows to spend N1.1 trillion in 2020, it may not earn this amount of money in revenue in the next 10 years.
What the state audited account said
According to the audit report of the state, in 2017, the recurrent revenue received by the State Government in 2017 amounted to N54.28 billion as against the projected revenue of N95.75 billion showing a shortfall of N41.47 billion representing 43.3 per cent.
On capital expenditure, in 2017, the state government only implemented 6.2 percent of it intended capital expenses. The actual capital expenditure for the 2017 financial year was N38.72 billion as against the estimated Capital Expenditure of N621.47 billion.
In 2018, the state government had projected a recurrent revenue of N113.36 billion, however, it only received N60.3 billion, showing a shortfall of N53.05 billion. For capital expenditure, as against the budgeted N1.1 trillion capital expenditure, the state government was only able to implement N61 billion worth of capital expenses, representing 5.51 percent, lower than the 6.2 percent capital implementation of 2017.
Increasing debt burden
It will not be far from the truth to say that the state resolves to take loan to service its financial obligation so as to meet up on some of its impracticable budget projections. Data from the Debt Management Office (DMO) shows that the total debt stock of the state between 2015 and 2019 has a 45 percent increase.
In 2015, the total debt stock of the state stood at N157 billion, 2016- N163 billion, 2017- N176.87 billion, 2018- N225.5 billion, and as of June 2019, the debt stock is at N227.6 billion.
The concern about the Cross River state to present a higher budget is how the state will get the money to fully implement its budget, knowing its revenues come either from FAAC or from IGR.
As indicated by the federation account allocation and IGR in 2017 and 2018, the combined total revenues for the state in 2020 cannot exceed N100 billion. With this projection, the total revenues of the state will be less than 15 percent of its budget.
Therefore, if the budgets of the states will be implemented fully, nothing less than 90 percent will be borrowed. This budget deficit is very unrealistic.