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The coronavirus outbreak has forced the Lagos State Government to toll the line of the Federal Government by cutting its 2020 Budget. The budget which was pegged at N1.169 trillion has now been reduced to N920.5 billion. This represents a 21 per cent cut, while the budget deficit increased by 11 per cent.
The budget was slashed by 12 per cent to reflect the current economic situation which has worsened due to the prolonged battle against COVID-19. While explaining factors that fueled the decision to cut the budget, Lagos State's Commissioner for Economic Planning and Budget, Sam Egube, cited the fall in oil prices and expected impact on statutory allocation expectations as reasons.
Egube also listed downward pressure on IGR (Internally Generated Revenue), devaluation of the Naira, reduced public and private investment, increased inflation, dropped demand for goods and services and reduction in manufacturing which would cause a decline in Gross Domestic Products growth and also cause an increase in unemployment. He said the decision to cut the budget will enable the State sail through the economic fallout of the pandemic which has shutdown global economy.
What's new in the 2020 budget cut?
Aside from the total budget cut from N1.169 trillion to N920.5 billion, the budget deficit increased according to a report by The Nation. The budget deficit grew by 11 per cent from N97.5 billion to N108 billion. Meanwhile, Recurrent Expenditure (Debt and Non-Debt) dropped to N411.608 billion from the initial N457.529 billion; this shows a 10 per cent decline, and the Total Capital Expenditure was downgraded by 28 per cent to hit N508.861 billion from N711.033 billion.
The revised budget which has been approved by the Lagos Executive Council (LEC) also saw Total Revenue fall by 24 per cent, hitting N812.464 billion from projected N1.1 billion.
How Lagos plans to mitigate COVID-19 impact
While disclosing how Lagos State Government plan to mitigate the adverse effect of COVID-19 pandemic, Egube said, "maintaining a strong pandemic response, restarting the state’s economy and re-imaging the way Lagos operates,” Explaining further that the measures taken so far will ensure food security and safety-net mechanism, economic stimulus and ensure public safety and well-being.
He added that, ”we are going to optimise the state’s budget for investments in jobs and priority sectors through job creation, economic stabilization and fiscal consolidation. While to reimagine the state Economy, we will prepare the state to operate and thrive within the new reality with digitization, business environment reforms, improved economy and diversification of revenue source.”
Where jobs will be coming from in 2020
With companies already downsizing their workforce due to negative turnout of COVID-19 and the months-lockdown preventing businesses from operating, Egube said Lagos State is targeting construction, drainage and LAWMA ( Lagos State Waste Management Agency) as key to unlocking employment opportunities.
Egube also mentioned agriculture - with focus on aqua-culture - food storage, health, tourism and hospitality, fashion and leather industry as some of the sectors that the state government will focus on. He also disclosed that the business community have also been supporting the state.
Meanwhile, he revealed that road linking the state’s inner corridor to Lekki will be completed in 24 months as the contract for the road has already been awarded.
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