Bayelsa State government has faulted a report of BudgIT which described it as economically and financially unviable.
The state government described the rating as not only faulty but relied on tangential parameters inconsistent with economic fundamentals.
Through its commissioner for finance, Mr Maxwell Ebibai, the state government said the recent 2022 Financial Responsibility Report on the Sustainability of the 36 States of the Federation by BudgIT, is merely a rehash of last year’s ranking.
Ebibai, in a statement he issued in Yenagoa, stated that as before, the current report erroneously depended on opaque data and criteria bordering largely on the ability of a state to meet its operating expenses (recurrent expenditure) with only its Internally Generated Revenue.
He said, “The very notion of creating a dichotomy between ‘federal allocations’ and ‘internally generated revenue’ is a misnomer that is adding insult to painful injury as, over the years, we have protested the absence of true fiscal federalism and inequity of the revenue-sharing formula that robs states like Bayelsa in favour of the collective”.
He said that it is incomprehensible not to appreciate that oil and gas are produced at a significant opportunity cost to states and that the derivation revenue compensates for such brutal environmental degradation. He noted that as a government, they have protested the 2021 ranking as being defective for excluding key revenue sources such as mineral oil derivation funds in the analysis, a position the BudgiT team acquiesced to.
“We are again bewildered that they returned to this cynical profiling. It should be worrisome to BudgiT that the huge revenue that should accrue to Bayelsa State from taxes of oil multinationals operating in the state were being paid to states where the companies have their offices domiciled.
“Notwithstanding the disequilibrium, we are happy to state unequivocally that the financial standing and sustainability of Bayelsa State are sound and not in any jeopardy as the government can comfortably meet its obligations, including regular payment of salaries and pensions,” he said.
He said that it is also disturbing that a state with a low debt profile that is effectively managing its financial liabilities would be ranked low against states with higher debt profile, saying more so, as the state is already clearing the debts. On biometric capturing of the state’s civil servants, he said the state has successfully concluded the process to achieve payroll transparency, as a result of which salaries are paid promptly usually by the 25th day of the month.
He added that the government has continued to invest in human capital development and empowerment programmes, without neglecting critical financially demanding infrastructure projects such as the Yenagoa-Oporoma Road and Bridges, the Sagbama-Ekeremor Road with seven bridges and the Nembe-Brass Road with 10 bridges as well as other critical big-tickets projects across the state that will stir its economic life.
“It should be noted that states with limited federal presence are inherently disadvantaged with the ranking methodology where facilities like ports give a clear edge to some states. For a fair analysis and a more comparable measure of fiscal sustainability, BudgIT should expand its indices to cover derivation revenue as IGR in future profiling.
“We are, therefore, in strong disagreement with the ranking as released by BudgIT, and wish to state categorically that the Bayelsa State government rejects the report as it failed to rely on key financial instruments that are legitimate, equitable and sustainable,” he said.
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