The Federal Government has stated that it will be servicing state debts by deducting over N415 billion from their allocations News About Nigeria reports.
This was made known according to data from the Federation Account Allocation Committee Disbursement reports (FAACD) which was published by the National Bureau of Statistics.
According to findings, this deduction will be used to service the external loans of state governments and were made between 2019 and 2023 from the allocations given to state governments from the Federation Account.
Recall that the Government borrowed a total sum of N4.94 trillion from domestic sources in the first six months of the administration of President Bola Tinubu, indicating significant dependence on loans.
The domestic debts however, rose by N4.94 trillion from N48.3 trillion recorded in June 2023 to N53.3 trillion as of December 31, 2023. Although external loans reduced by $664 million in the six months ($43.2 million I n June and $42.4 million in December), the figure increased by $901m when compared with $41.5 million in September and $42.4 million in December.
Analysis also revealed that the federation account is currently being managed under a legal framework that allows funds to be shared under three major components: statutory allocation, Value Added Tax distribution and derivation principle.
The state with the most deductions was Lagos, with about N131.1 billion deducted for external debt servicing.
It was followed by Kaduna where N45.85 billion was deducted, and Cross River with N21.59 billion deducted.
Also, about N18.25 billion, N14.76 billion, N10.31 billion and N10.92 billion were deducted from Oyo, Rivers, Ogun and Edo states respectively.
The least affected states were Borno (N1.55 billion), Yobe (N2.1 billion) and Zamfara (N2.1 billion).
