The Lagos State Executive Council yesterday approved the revision of the state’s 2020 budget from N1,168.6bn earlier approved by the state House of Assembly in December 2019 to N920.5bn.
The review was in response to the Coronavirus pandemic which has triggered global economic downturn.
According to the state Commissioner for Economic Planning and Budget, Mr. Sam Egube, the review represents 21 percent reduction in the previous estimate.
While briefing newsmen at the state secretariat Alausa, the Commissioner explained that the COVID-19 pandemic has metamorphosed into economic pandemic which has necessitated the “reordering” of the budget.
The reviewed budget is expected to be transmitted to the state House of Assembly for consideration and approval.
The commissioner was however quick to allay fears of civil servants, assuring that the government would not sack any worker as the personnel cost remains the same.
The state government which relies mostly on internally generated revenue expects a drop in revenue by 24 per cent due to the slow down in economic activities occasioned by the COVID-19 pandemic.
He gave the proposed breakdown of the revised budget as follows; the Total Budget Size is reduced by 21% from N1,168.562bn to N920.469bn with the Financing Deficit increasing slightly by 11% from N97.533bn to N108.005bn.
Recurrent Expenditure (Debt and Non-Debt) declines by 10% from the initial N457.529bn to N411.608bn and Total Capital Expenditure is reduced by 28% from N711.033 to N508.861.
Egube explained that the first quarter of Y2020 recorded a budget performance of 56% (N163.2Bn); which is higher than the 68% (N148.3bn) recorded for the same period in 2019.
The Commissioner listed some of the factors that necessitated the budget review to include fall in crude oil prices “with deleterious effects on statutory allocation expectations, downward pressure of IGR, devaluation of the Naira and reduced public and private investment.”
Other factors he listed included increased inflation, decline in demand for goods and services and reduction in manufacturing activities, which he said portends lower GDP growth and Increased unemployment.
According to him, the state would also create a stabilization fund of one percent of yearly IGR to support the state during future emergencies.
The government as part of the stabilization drive would dedicate N620m on job initiatives and another N385m for digital skills initiatives, the Commissioner said, adding that there would be business environment reform and promotion of ease of doing business.
He explained that with the Strong Pandemic Response, the state government will engender food security and safety net mechanism, economic stimulus, and ensure public safety and wellbeing.