As part of the fall-back plans to further revamp the Economy Post-COVID-19, the Lagos State Government has started a downward review of the 2020 budget due to the adverse effect of the COVID-19 on the economy
Speaking with newsmen on Thursday, May 21, The Lagos State Commissioner for Economic Planning and Budget Sam Egube, disclosed that the budget review which as been endorsed by the state executive council is aimed at reducing the N1.168 trillion budget approved by the Lagos State House of Assembly to N920.5 billion.
From the statistical point of view, the initial budget figure contained a capital expenditure of N711 billion and N457 billion recurrent budget, showing a strong preference of 60 percent ratio for capital projects.
Egube also revealed that the first quarter of 2020 recorded a budget performance of 56 percent (N163.28 billion), which was higher than the 68 percent (N148.38 billion) recorded for the same period in 2019.
However, The Hon. Commissioner also pointed out the negative effect of the fall in crude oil prices on statutory allocation expectations, the downward pressure on Internally Generated Revenue (IGR), devaluation of the naira, reduced public and private investment and increased inflation rate as reasons for the overhaul of the projected figures of the 2020 budget.
He listed other factors to include the decline in demand for goods and services, as well as a reduction in manufacturing activities which he said indicated lower GDP growth and increased unemployment.
Egube explained that Lagos has adopted holistic measures to the shocks induced by COVID-19, adding that the strategies included the maintenance of strong pandemic response, restarting the economy, and reimagining the way the state has been operating.
According to him, the strong pandemic response will enable the state government to engender food security and safety net mechanisms, in addition to economic stimulus.
“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,” Egube said.
He added, “In reimagining 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 disclosed that the revised budget has a reduction of the total budget size by 21 percent from N1,168.562 billion to N920.469 billion, with the financing deficit-increasing slightly by 11 percent from N97.533 billion to N108.005 billion.
He added that the recurrent expenditure (debt and non-debt) in the revised budget will decline by 10 percent from N457.529 billion to N411.608 billion and 28 percent reduction has been proposed for total capital expenditure from N711.033 billion to N508.861 billion.
“The revised total revenue represents a drop of 24 percent in the previous projections from N1,107.029 billion to N812.46 billion,” He said.