EXCLUSIVE: Oyo State Spends N4.7 Out Of Every N10 Paid By Taxpayers On Debt Servicing In 39 Months

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Analysis of the budget performance report of Oyo State shows that between 2021 and the first three months of 2024, the state borrowed the sum of N229 billion.

In May 2024, it was reported that the Oyo State House of Assembly had approved a loan facility of N10 billion to enable the state to provide counterpart funding for World Bank-assisted projects, UBEC-SUBEB matching grant. 

Before the approval, details provided by the state in its budget performance reports showed that N20.3 billion had already been borrowedin the first three months of 2024.

In the past, for instance, in 2023, there wereconcerns about the loan portfolio of the state.

This report examines the loan portfolio of the state and the resultant impact of debt servicing on its revenue.

Analysis of the budget performance report of Oyo State shows that between 2021 and the first three months of 2024, the state borrowed the sum of N229 billion.

The highest amount so far was borrowed in 2023, when N84.9 billion was obtained as a loan by the state.

Since 2021, the state has continued an upward trend in obtaining loans. In 2021, it borrowed N51.4 billion but borrowed N21.9 billion more in 2022, when its total loan for the year stood at N73.3 billion.

The state continued its upward trend for loans in 2023. In the 2023 fiscal year, it borrowed N11.6 billion more than it did in 2022, with a total loan portfolio of N84.9 billion.

More Loan, More Debt Servicing

The increasing debt burden of the state translates to increasing debt servicing. 

Between 2021 and the first quarter of 2024, the state kept spending higher amounts on debt servicing.

The debt-service figure grew from N4.1 billion in 2021, to N13.5 billion in 2022 and N17.8 billion in 2023.

Already in the first quarter of 2024, the sum of N9.5 billion has been spent on debt servicing.

Taxpayers’ Money At The Mercy Of Debt Servicing

Further analysis by SaharaReporters showsthat on average, N4.7 naira of every N10 paid by Oyo State residents as tax went to debt servicing between 2021 and the first quarter of 2024.

In 2021, debt servicing gulped N4.1 billion, whereas the state made N23.1 billion as tax revenue. In 2022, debt servicing increased to N13.5 billion, while tax earned grew to N26.5 billion.

In 2023, debt servicing stood at N17.8 billion while tax revenue was N34.4 billion. In the first three months of 2024, the state earned N10.1 billion but has already spent N9.5 billion on debt servicing. 

In total, From the beginning of the first quarter of 2020 to the end of the first quarter of 2024, the state earned N94.1 billion from taxpayers and spent N44.9 billion on debt servicing, representing 47.7% of the total money earned as tax, meaning that for every N10 earned, debt servicing gulps N4.7.

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