An economist, Mr
Iduonku Ikata, has said that the recent bail out funds handed down to states in the country to pay their workers would not add any positive impact on the economy if such funds could not be used in infrastructural development.
Ikata, a Senor Partner, Ikata, Ikata and Company who spoke to our correspondent in an exclusive interview in Port Harcourt yesterday, explained that the development would put so much money into the recurrent expenditure with little for capital expenditure.
“It is capital expenditure that drives productivity, it is capital expenditure that provides infrastructure while recurrent expenditure does not add anything, it just bloats the cost of governance,” he said.
According to him, it was necessary to determine under which window such funds were released and applied.
He said if government could not define the windows under which these bailout expenses are applied, it would not be easy to give a verdict on the long economic picture.
Ikata, who is a tax expert further explained that if such funds were strictly for the payment of worker’s salaries alone and not contractors for ongoing projects to provide benefit to the public then such funds were not well spent.
He said even with the assumed general knowledge that the money the federal government was giving to the states was to enable them pay salaries, it would at the long run not add any social benefit to them (states).
“It is not likely to add any social infrastructure to the assets of the states, therefore, the question remains that if you are not procuring assets or anything that promises future economic benefit it means the money spent on an item that will not produce any tangible infrastructure is of no benefit to the people”, he said.
On the ability or otherwise of the various state governments to pay their workers, Ikata expressed the view that the governors did not set their priorities right.
He said it was not that the governments could not pay salaries but it was their priorities that are being questioned.
He further opined that the governors deliberately removed workers salaries out of their priority lists to enable them finance other exigencies.
“If what you want to do with the money (salary) was a capital item with the expectation of a future economic benefit, good, but we all suspect and I doubt if it was expended on infrastructure”, he said.