DEBT SUSTAINABILITY ANALYSIS (DSA)

The DSA was carried out to ascertain the liquidity and Solvency position of the State Government debt status. The State liquidity ratio (Debt service Sustainability) of the debt sustainability analysis determines the capacity of the Government to meet up with its monthly debt service obligations as at when due without recourse to other exceptional financing. The liquidity ratio followed the threshold of 40% and is not to be exceeded. While the Solvency ratio (Debt Stock Sustainability) examines the capacity of the State Government to meet up with its future debt stock obligations. The Solvency ratio has the threshold of 250%. Both the 40% and the 250% are standard thresholds provided by World Bank Country Policy and Institutional Assessment (CPIA). Those thresholds are used by the federal Debt Management Office in debt sustainability analysis and by extension, the DMAs.