Due to the adverse economic impact of the COVID-19 pandemic, the Lagos State Government has begun a downward review of the 2020 budget.
Sam Egube, Lagos Economic Planning and Budget Commissioner, disclosed the news on Thursday, May 21.
He said the review, approved by the Executive Council of the State Council, aimed to reduce the budget of N1.168 trillion approved by the Lagos State Capital to N920.5 billion.
Egube said the initial budget figures included N711 billion and N445.7 billion in recurrent capital expenditures, showing that the strong demand for capital projects is 60%.
He revealed that the budget performance for the first quarter of 2020 was 56% (N163.28 billion), higher than 68% (N148.38 billion ) in the same period in 2019.
The Commissioner pointed out that the negative impact of falling crude oil prices on statutory distribution expectations, downward pressure on internally generated income (IGR), depreciation of the naira, reduced public and private investment, and rising inflation rates are the reasons for the reform. Projected figures for the 2020 budget.
He cited other factors, including a decline in demand for goods and services and a decline in manufacturing activity, which he said indicates a decline in GDP growth and an increase in unemployment.
Egube explained that Lagos took a holistic approach to the impact of COVID-19, adding that the strategy included maintaining a strong pandemic response, restarting the economy and reimagining the way the country operates.
According to him, the strong response to the epidemic will enable the state government to establish food safety and safety net mechanisms in addition to economic stimulus measures.
“To restart the economy, we will optimize the state budget for investment in jobs and priority sectors through job creation, economic stabilization and fiscal consolidation,” said Egube.
He added: “By reworking the state economy, we will prepare the state for action and development in a new reality thanks to digitization, reforms of the business environment, improved economy and diversification of income sources.”
The Commissioner revealed that the revised budget reduced the total budget by 21 percent from ND 1,168.562 billion to ND 920,469 billion, with the funding deficit slightly increasing by 11 percent from N7,5 97,533 billion to N 88.005 billion.
He added that recurring expenses (debt and debts) in the adjusted budget would fall by 10 percent from N457.529 billion to N411.608 billion, and a 28% reduction in total capital expenditure from N711.033 billion to N50508.861 billion was proposed.