By Aminu Abubakar

Katsina State’s fiscal operations in the first quarter of 2026 reflect a pattern of rising debt obligations alongside continued reliance on external borrowing, according to details contained in its Budget Performance Report for the period.

The report shows that the state expended N7.48 billion on debt servicing between January and March, while also recording N8.55 billion in fresh foreign loan inflows within the same timeframe. The proximity of these figures highlights the scale of debt-related cash flows within the state’s finances during the quarter.

Loan receipts were captured under the Capital Development Fund (CDF), where a total of N8.55 billion was realised, representing 6.8 per cent of the state’s total borrowing projection for 2026. All the loans recorded during the period were sourced externally, accounting for about 7.0 per cent of the N122.13 billion budgeted for international borrowing. No domestic borrowing was recorded, despite a provision of N3.2 billion in the approved budget.

On the expenditure side, public debt charges amounted to N7.48 billion, equivalent to 36.6 per cent of the state’s total debt service allocation of N20.43 billion for the year. This indicates that more than one-third of the annual debt servicing provision was utilised within the first quarter.

A detailed breakdown shows that foreign debt servicing accounted for a substantial share of the total. The state recorded N4.37 billion in foreign principal repayments and N554.52 million in foreign interest payments. Domestic debt obligations included N2.34 billion in principal repayments and N212.5 million in interest.

The alignment between new borrowing and debt servicing levels suggests that debt-related transactions remain a significant component of the state’s cash flow structure. However, the data does not, on its own, establish the specific uses of newly acquired loans or the extent to which they are linked to capital project financing.

Revenue performance during the period presents a mixed outcome. In total the Internally Generated Revenue stood at N13.1 billion.

Under the “Earnings-General” category, the state generated N3.59 billion out of a projected N12.63 billion, representing a 28.4 per cent performance rate for the quarter.

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Commercial activities were the primary driver of earnings, contributing N3.24 billion and achieving 45.2 per cent of their annual target. Earnings from Katsina Motel also recorded a relatively strong performance, with N49.22 million realised, representing 82.0 per cent of its projection.

In contrast, several revenue lines recorded no inflows during the period. These include laboratory services, ICT services, government vehicle usage, medical services, and formal and informal capitation. Other categories, such as earnings from agricultural produce and tourism-related activities, posted marginal contributions relative to their projections.

Property-related revenue also underperformed. Rent on government buildings generated N13.63 million out of a budgeted N496.25 million, representing 2.7 per cent performance. No revenue was recorded from rent on government land and other related categories during the quarter.

Investment income showed similar trends, with no dividend receipts recorded despite a budget of N220 million. Interest income stood at N346.14 million, representing 8.4 per cent of its annual target.

In contrast to internally generated revenue, inflows from grants remained significant. The state recorded N11.33 billion in grants during the quarter, representing 6.9 per cent of the annual projection of N164.79 billion. Domestic grants accounted for N10.10 billion of this amount, largely from capital grants linked to local government areas. Foreign grants totalled N1.23 billion, representing 3.1 per cent performance.

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The composition of revenue indicates continued dependence on intergovernmental transfers and external sources, with internally generated revenue contributing a relatively smaller share.

Expenditure data further reflects the structure of the state’s fiscal commitments. In addition to debt servicing, Katsina recorded N4.49 billion in miscellaneous expenses, representing 22.2 per cent of the N20.22 billion budget for that category.

Within this segment, recurrent adjustment costs accounted for N3.19 billion, while other notable expenditures included publicity and advertisements (N270.17 million), committee expenses (N248.84 million), and refreshments and meals (N151.30 million).

Spending on fuel and lubricants stood at N260.92 million, while financial charges, largely insurance-related, amounted to N155.29 million.

Grants and contributions to institutions, communities, and organisations totalled N459.99 million, with N406.76 million directed to communities and non-governmental organisations. Subsidy expenditure was relatively limited during the period, with N112.67 million spent out of a budgeted N4.51 billion.

Transfers to fund recurrent expenditure totalled N585.34 million, all of which was allocated to the state’s Internal Revenue Service. This represents 14.2 per cent of the annual allocation for that item and may indicate ongoing efforts to support revenue administration.

The first quarter performance aligns with broader fiscal trends outlined in Katsina State’s medium-term projections. In an earlier report, SolaceBase highlighted key features of the state’s 2025–2028 Medium-Term Expenditure Framework (MTEF), including the projected growth in revenue alongside sustained reliance on borrowing.

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According to the framework, total recurrent revenue is expected to increase from N187.87 billion in 2025 to N302.44 billion by 2028. Statutory allocations are projected to rise from N91.07 billion to N152.77 billion, while Value Added Tax receipts are expected to grow from N58.16 billion to N92.06 billion over the same period.

Internally generated revenue is projected to increase from N38.65 billion in 2025 to N57.61 billion by 2028. Despite this growth, it is expected to account for less than 20 per cent of total recurrent revenue by the end of the projection period.

Longer-term projections contained in the state’s Debt Sustainability Analysis indicate that internally generated revenue could reach N90.59 billion by 2034. Over the same period, gross Federation Account allocations are projected to increase from N348.04 billion to N726.13 billion, while grants are expected to rise from N79.70 billion to N126.71 billion.

These projections suggest a revenue structure that remains anchored on federal transfers and externally linked inflows. As such, fiscal outcomes may continue to be influenced by broader macroeconomic conditions, including oil price movements, exchange rate dynamics, and national revenue performance.

Taken together, the first quarter data and medium-term projections present a fiscal structure in which borrowing, statutory transfers, grants, and internally generated revenue all form components of the state’s financing framework.

As the 2026 fiscal year progresses, subsequent quarterly reports will provide additional data on revenue performance, borrowing activity, and debt servicing patterns, which will further clarify the state’s overall budget execution trajectory.