BUDGET: ALEX OTTI’S 2024 UNREALISTIC BUDGET OF EXCESSIVE BORROWING OF N401 BILLION – Abia PDP reacts to proposal. 

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The attention of the Abia PDP has been drawn to the 2024 Abia State budget proposal presented to the Abia State House of Assembly by Alex Otti for consideration approval, and after reviewing the proposals came to the inevitable conclusion that it is unrealistic and a ploy to create enough grounds of excuses for his inability to deliver on his promises and much-touted magic wand in good governance and excellent management of resources.

A statement signed by Hon. Elder Abraham Amah, Abia PDP Vice Chairman/Acting State Publicity Secretary says, according to the proposal, the budget’s total figure is N567b; that is N407b and three and half times higher than the State’s 2023 budget and N420b and more than four times the N2022 budget even when the State’s economy grew at  less than five per cent in the year 2023. The smoking gun in the budget is that of the N567b, only N166.08b, about 29 per cent, would be generated from by the government through the monthly Federation Allocation Account Committee, FAAC and the State’s Internally Generated Revenue, IGR (which has even dropped from the Ikpeazu era of N5.7b monthly to N3.3b in the last six months despite all the fuss about automation that was used to create political noise in the State) while the balance of N401b, which is 71% of the budget would be borrowed from both foreign and local lenders.

Moreover, the FAAC revenue is almost solely dependent on the FG’s budget benchmark of oil price of $77 per barrel which is always open to the volatilities of international politics and can fluctuate precipitously and with shocking spontaneity. That alone is a red flag and a dead end which dispassionate analysts have read early on and clearly shows that there is nothing to cheer about.

 

Worse still, of the N567b, 84% amounting to N476b would be spent on capital expenditure while 16%, amounting to N91b would be spent on recurrent expenditure. The N91b recurrent expenditure is more than 50% the last recurrent expenditure of N35b of the 2023 budget. The recurrent expenditure comprises wage bills of civil servants, security vote and running of the government house. It is easy to see the road we are headed because more than 15,000 of Abia civil servants have been sacked, more than 10,000 unpaid in the last six months, yet the recurrent expenditure continues to rise unconstrained.

In the Q3 2023 budget (July-September 2023) Alex Otti spent 87% of the N25b that accrued to the State on himself and his office and this trend would continue because the N91b recurrent expenditure would follow a similar pattern.  He took N5.3b to service his office from his personal house, N2.8b as security vote when he had campaigned that he will not take security vote, used N233m for feeding, N552m for information dissemination and other humongous amounts that cannot be accounted for.

 

Of the N401b to be borrowed, $115m which translates to about N100b, using the prevailing official exchange rate has already been approved by the lender, African Development Bank, AfDB and the obligor, the FGN has also approved for disbursement, and Alex Otti still proposes to borrow N300b from both local and external sources. This means that Otti would borrow three and half times more than the 2023 budget and four times more than the 2022 budget which is a practical impossibility because the country’s lending structure does not support such extensive borrowing and the cumbersome process of lending approvals cannot be completed in a 12-month circle. So from the onset, Alex Otti has already planned for an excuse for his failure when he fails to borrow about N300b to fund his unrealistic budget.

 

Another elephant in the room which his armchair analysts who are jumping up and down at the high figure have failed to talk about is Abia’s debt exposure which he intends to over-bloat, per adventure he finds his way through the borrowing process. In the past 32 years, Abia’s debt profile which Alex Otti converted into a hymn in the last eight years is put officially at N166b and this includes those inherited from our sister State, Imo when Abia was carved out of the old Imo State.

 

If Alex Otti succeeds in borrowing N300b in one year, he would have shot up Abia’s debt exposure up to N570b in just one year. And the economic question to ask is, which of the capital expenditure projects is an income generating project that would generate the income to repay the loan or is he just borrowing for aesthetics? The debt per capita of Abia is currently N46,315 and by the time he borrows to fund the 2024 budget, the debt per capita would rise by N137,209 by the end of 2025.

 

From the foregoing, it is obvious even to the layman in Economics and Finance that the 2024 budget proposals made by Alex Otti would mean more suffering for the masses because the budget as it is, is unrealistic and offers no hope for the future of Abians.

 

The Abia PDP calls on our representatives in the State House of Assembly to study the 2024 budget proposal closely, cut the excesses and save future generations of Abians from the futures-debt which Alex Otti wants to lead them into.

 

We also call on the good people of Abia to prevail upon Alex Otti from mortgaging our future with debts and not allow him to bite more than he can chew at a time and ask him to cut his cloth according to his size. The budget is not an instrument for grandstanding or posturing to the public. It is one that touches every penny and lives of citizens everyday of the year and should not be converted to political showmanship.


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