Bayelsa govt rejects Budgit report, says ranking method is erroneous, unfair

Yenagoa—The Bayelsa State government has rejected the 2022 Financial Responsibility report by BudgiT, saying it is merely a rehash of last year’s ranking which the state government described as faulty and inconsistent with basic economic fundamentals.

This year’s financial responsibility report on the sustainability of the 36 States of the federation by BudgiT saw Bayelsa ranked the bottom state on the index which suggests that the state is the most dependent state on federally distributed revenue with very low internally generated revenue to cater for its operations.

But the Bayelsa state commissioner of information, Mr. Maxwell Ebibai, in a statement said the report was erroneous given that it was based on only the ability of a state to meet its operating expenses (recurrent expenditure) with only its internally generated revenue.

Ebibai said the ranking is unfair to oil-producing states like Bayelsa when there is no true fiscal federalism and the existence of the inequity of the revenue-sharing formula that robs the state in favour of the collective.

According to him, revenues in form of taxes by multinational oil companies that should be accrued to the state to boost the State’s IGR are also being paid to other states where the companies are domiciled.

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.

“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.

“As a government, we 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.”

The commissioner said despite the imbalance in the revenue sharing formula in the country, Bayelsa state can still pay its workers and pensioners as well as invest in human capital development and undertake capital projects like the ongoing three senatorial road projects in the state.

He, however, said that states with little or no federal presence like Bayelsa are disadvantaged in the ranking index, unlike States with ports.

“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.

“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 a higher debt profile. More so, we are clearing the debts.

“On biometric capturing of the state’s civil servants, we have successfully concluded the process to achieve payroll transparency. Following this, salaries are paid promptly usually by the 25th day of the month.

“The government continues 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.”

He advised that “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.”

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