Get your pop corn and a cup of coffee, let's have a quick look at the looming financial crisis in the State of Osun and why the decision of today is important to shaping their future.
Unlike the saying that the person on the floor does not need to fear downfall, Osun State was 36th in 2017 and needs to be worried.
The low Net FAAC received was due to huge debt portfolio of the State
The net FAAC is used to pay salaries and other OPEX
Meaning it's doing too many things at the same time with limited capital. We call it overtrading in the private sector.
He saw how infrastructure can drive economic growth. Hence he got money from everywhere possible just to drive infrastructure without thinking or devising a plan to pay back.
Now, let's look at the real problem taking hints from 2017.
Osun net FAAC for 2017 was N10.4bn and IGR was N11.7bn giving a total revenue of 22bn meaning the recurrent revenue was 3X larger than revenue for 2017
Osun State is not credit worthy so to save the issue he had the guts to introduce modulated salaries 🤣🤣🤣🤣
To cover up for the deficit they will take short term financing among others.
Whoever wins today has alot of financial engineering to do to savage the crisis and restore the lost glory