Mr. Udom Emmanuel, Akwa Ibom State Governor. Photo credit: Facebook/Ikenna Kalu.
“The cost of governance in the state has increased by 273 per cent between 2011 and 2021, with spurious items such as debt servicing, cost of purchasing government vehicles, and running of government house taking a huge chunk of overhead spending”.
By Abasifreke Effiong
Policy Alert, a non-governmental organisation working on fiscal governance and environmental Justice in the Niger Delta, has again raised alarm over very high cost of governance and declining revenue in Akwa Ibom state.
The organisation said the the cost of governance in the state has increased by 273 per cent between 2011 and 2021, with “spurious items such as debt servicing, cost of purchasing government vehicles, and running of government house taking a huge chunk of overhead spending.”
While advising the state government to cut down its cost of governance, the NGO said “ballooning cost of governance” and “declining revenue” are major threats to the state’s fiscal health.
In a memorandum to the public consultation on the state’s 2023-2025 Medium Term Expenditure Framework/Fiscal Strategy Paper organised by the Ministry of Economic Development, Policy Alert through her Programme Officer, Fiscal Reforms and Anti-Corruption, Mr Faith Paulinus, said the calibration of the state’s medium term expenditure framework, MTEF, around debt-to-GDP ratio is faulty.
“We are also worried that the state has again insisted on calibrating its MTEF around Debt-to-GDP ratio. This is faulty for two reasons. First, we do not have reliable and current figures for sub-national GDP. Second, debt-to-GDP ratio gives a false sense of fiscal sustainability. It is the same Debt to GDP fallacy that the federal government has been relying on to over-reach its borrowing options and we see where that has kept the country today.”
“Our advice to the state government is to base its medium term projections on Debt-to-Revenue ratio, which is a more realistic predictor of fiscal health.”
The memorandum raised concerns over the rising debt profile of the state and the huge amount of funds spent on debt servicing.
However, the organisation commended the state government for planning to restructure its recurrent/capital expenditure to 30:70 ratio by the year 2025 and lauded the state for opening up the MTEF process to public consultation in line with the state fiscal responsibility law.
“While also commending the state government for opening up the MTEF process to public consultation in line with the provisions of the state’s Fiscal Responsibility Law, we caution that the continued delay in inaugurating the Fiscal Responsibility Board with inclusion of representatives from civil society and labour constitutes a violation of the law and undermines the legitimacy of the entire MTEF process”, Policy Alert said.