The Ogun State Government says it has maintained prudence in managing its debt profile, stressing that all borrowings remain within the limits prescribed by fiscal responsibility guidelines.

The state Commissioner for Finance, Dapo Okubadejo, stated this at the 2026 budget breakdown/media parley in Abeokuta on Tuesday.

Mr Okubadejo, who is also the economic adviser to the governor, explained that the state’s funding structure comprised federal allocations, internally generated revenue (IGR) and debt.

The commissioner noted that borrowing had been undertaken responsibly to support critical infrastructure development, emphasising that the key issue was not merely the size of the debt but how it was utilised.

He further explained that the borrowings were largely deployed to fund infrastructure projects, arguing that such investments served as a hedge against inflation.

According to him, infrastructure projects executed in 2019 and 2020 at lower exchange and inflation rates would cost significantly more if undertaken in 2025, when inflation is averaging nearly 30 per cent.

He maintained that borrowing to finance infrastructure at an average interest rate of about 20 per cent was a strategic decision, given prevailing economic realities.

He reiterated the government’s commitment to fiscal discipline while leveraging debt to drive long-term economic growth and development in the state.

“We have in our debt portfolio a reasonable amount of money that we’re paying at single-digit interest rates because of the structure that we are putting in place, the financing strategy that we’re putting in place to optimise this debt.

“We also have longer-term debt that we have also put in place to ease the pressure or the burden on repayment.

“So really, the most important thing is that the content of the debt is reasonable compared to the level of economic activity or the size of your revenue capacity. And by far the most important thing is your debt repayment ability. So we’re really taking note of the debt. We’re watching it closely; we’re guided by using it to fund only capital expenditure and not recurrent expenditure,” he said.

Mr Okubadejo explained that sustained security, reforms and massive infrastructure development had positioned the state as a preferred investment destination in Nigeria.

He noted that the prevailing peace and stability in the state has continued to attract local and foreign investors seeking to establish businesses and manufacturing facilities.

Governor Dapo Abiodun on January 1, signed the N1.669 trillion 2026 budget christened “Budget of Sustainable Legacy” into law.

The breakdown of key allocation indicated that infrastructure would gulp 32 per cent of the budget at N526.15 billion, and education would gulp N275 billion, representing 17 per cent of the budget.

An allocation of N210.59 billion, accounting for 13 per cent of the budget, was earmarked for the health sector, and N166.96 billion, a 10 per cent share, alloted to housing and community development.

The budget provides N40.54 billion at two per cent for agriculture and industry, N42.24 billion (three per cent) for recreation, culture and religion, and N72.82 billion (four per cent) for social protection.  

 (NAN)