As stubborn headwinds caused by the Covid-19 pandemic continue to rattle global economy, Lagos State government on Thursday reduced its 2020 budget by 21 per cent to N920.5 billion.
The State’s Commissioner for Economic Planning and Budget, Mr. Sam Egube in a statement noted N1.17 trillion was earlier approved by the State House of Assembly, but a downward review of the budget by cutting out N97bn from it became necessary following the Coronavirus-induced economic crisis.
Recall the Lagos State House of Assembly had in December, 2020 passed N1.169 trillion Appropriation Bill for the State.
The approved budget contained N457bn recurrent expenditure and capital of N711bn showing a strong preference for capital projects at 60%.
Egube said that the first quarter of 2020 recorded a budget performance of 56% (₦163.2Bn); which in absolute terms is higher than the 68% (₦148.3Bn) recorded for the same period in 2019.
Highlighting some of the factors that necessitated the review of the 2020 budget, the Commissioner said fall in crude oil prices with deleterious effects on statutory allocation expectations; downward pressure of IGR; and devaluation of the Naira had hampered economic prospects for the year.
Other factors include: reduced public and private investment; Increased inflation; decline in demand for goods and services and reduction in manufacturing activities, which portends lower GDP growth and Increased unemployment.
Egube noted that part of the State’s holistic approach to the COVID-19 shock already adopted by the state government going forward included maintaining a Strong Pandemic Response, Restarting the State Economy and Reimagining the way Lagos State operates
He explained that with the strong pandemic response, the state government will engender food security and safety net mechanism, economic stimulus, and ensure public safety and wellbeing.
“To Restart the Economy, we are going to optimize the state’s budget for investments in jobs and priority sectors through job creation, economic stabilization and fiscal consolidation. While to Reimagine the State Economy, we will prepare the State to operate and thrive within the new reality with digitization, business environment reforms, improved economy and diversification of revenue sources” the Commissioner added.
He gave the proposed breakdown of the revised budget as follows; the Total Budget Size is reduced by 21% from N1,168.562bn to N920.469bn with the Financing Deficit increasing slightly by 11% from N97.533bn to N108.005bn
Recurrent Expenditure (Debt and Non-Debt) declines by 10% from the initial N457.529bn to N411.608bn and Total Capital Expenditure is reduced by 28% from N711.033 to N508.861
The revised Total Revenue, according to Egube, represents a drop of 24% from the projected N1,107,029bn to N812.464bn