The Lagos State Government has reduced its budget for 2020 as a result of economic downturn occasioned by COVID-19 outbreak in the State. 

Sam Enugbe, State Commissioner for Economic Planning and Budget made this known on Thursday, May 21, during a press briefing while addressing the negative economic and social effects of the coronavirus.

Enugbe said the review which was approved by the State House of Assembly was targeted to reduce the N1.168 trillion budget approved by the Lagos State House of Assembly to N920.5 billion.

According to him, the initial budget figure contained a capital expenditure of N711 billion and N457 billion recurrent budget, showing a strong preference for the capital project by 60 per cent.

He said the revised budget has a reduction of the total budget size by 21 per cent from N1,168.562 trillion to N920.469 billion, with the financing deficit-increasing slightly by 11 per cent from N97.533 billion to N108.005 billion.

He revealed that the first quarter of 2020 recorded a budget performance of 56 per cent (N163.28 billion), which was in absolute terms higher than the 68 per cent (N148.38 billion) recorded for the same period in 2019.

The commissioner noted some factors which led to the review in the budget include: fall in crude oil prices, the downward pressure on Internally Generated Revenue (IGR), devaluation of the naira, reduced public and private investment and increased inflation rate. 

He added that the review was caused as a result of the decline in demand for goods and services, as well as a reduction in manufacturing activities which has increased unemployment and reduced GDP generated by the State.

Egube said part of the strategies put in place by the State Government to mitigate the effects of the pandemic included maintenance of strong pandemic response, restarting the economy, and re-imagining the way the administration processes in the State.

He explained that with the strong pandemic response, the state government would engender food security and safety net, provide economic stimulus, and ensure society was run by assuring public safety and wellbeing.

 “To restart the economy, we are going to optimize the State’s budget for investments in jobs and priority sectors through job creation, economic stabilization, and fiscal consolidation.” 

“In reimagining 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 sources.”

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The recurrent expenditure (debt and non-debt) in the revised budget, according to him, will decline by 10 per cent from N457.529 billion to N411.608 billion and 28 per cent reduction has been proposed for total capital expenditure from N711.033 billion to N508.861 billion.

According to Egube, the revised total revenue represents a drop of 24 per cent in the previous projections from N1,107.029 billion to N812.46 billion.