The World Bank is worried for Nigeria.

Its concern is that state governments are borrowing too much; much more than they can afford to pay back.

Recall that the lender had also in the recent past expressed the same concerns with the federal government.

In a report released in Abuja on Wednesday, the World Bank pointed out some of the challenges at the level of state government in the country, including increasing debts and fiscal deficits.

According to the biannual report, the debts of the states increased from 2.4% in 2014 to 4% of the Gross Domestic Product by the end of 2016.

Similarly, the expenditures in relation to revenues generated by the states increased from an estimated 0.2% of the GDP in 2014 to 1% in both 2015 and 2016.

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“Nigeria’s GDP expanded by 1.4% in the third quarter of 2017 (year-on-year), the second quarter of growth after the recession of 2016, reflecting recovery in oil production, good performance in agriculture, and stronger non-oil industry growth due to the easing of foreign exchange constraints.

“Yet, many fiscal challenges remain at different levels of government, and effort is needed to successfully address those. With shortfall in revenue, fiscal pressure persists at sub-national government levels, putting a strain on service delivery,” the world bank said in a statement heralding the report.

It stated that “the states’ fiscal crisis led to two sets of financial assistance packages by the Federal Government. The second – the Budget Support Facility (hinged on a 22-point Fiscal Sustainability Plan) – was advanced in mid-2016 and due to close in mid-2017”.

“While all states have made progress on the reform measures included in the 22-point Fiscal Sustainability Plan, implementation is incomplete. The need to strengthen fiscal performance through sustaining the state fiscal reforms that have been accelerated in the past two years is of paramount importance,” the bank noted.

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