Federation Accounts Allocation Committee (FAAC) has shared to the federal, state and local governments about N2.788tn between January and June this year, representing a 38 per cent increase over the N2.019tn shared in the first half of 2016.
According to the Quarterly Review of the Nigeria Extractive Industries Transparency Initiative, which focused on disbursements from the FAAC, the N2.8tn was shared among the three tiers of government by FAAC.
NEITI said the review was based on data it obtained at the meetings of FAAC, the National Bureau of Statistics, Office of the Accountant General of the Federation, the Federal Ministry of Finance and the Debt Management Office.
It said out of $2.788tn disbursed in the first half of 2017, the Federal Government received N1.09tn; 36 state governments received N923bn; while N549.8bn went to the 774 local governments in Nigeria.
A further breakdown shows that total releases to the three tiers of government amounted to N430.16bn in January, N514bn in February, N496.4bn in March, N418.82bn in April, N418.82bn in May and N462.36bn in June.
“However, despite the 38 per cent increase in disbursements in the first half of 2017 when compared with 2016, all the three tiers of government suffered significant revenue decline in terms of projected FAAC disbursement,” the agency said in a statement issued in Abuja on Sunday.
It added, “Coupled with the low price of oil is the country’s difficulty in meeting the targeted/budgeted production rate of 2.2 million barrels per day. Production has consistently fallen below two million barrels per day since March 2016.
“Thus, the double whammy of low oil prices and lower production that hit the country since 2014 has remained.”
NEITI stated that while the expected FAAC disbursement for the three tiers of government was N4.7tn, the actual FAAC disbursement to them was N2.788tn, representing a shortfall of over 40.67 per cent.
According to the publication, “the volatile nature of disbursements to all tiers of government in the first half of 2017 would suggest difficulty in implementing budgets at federal, state and local government levels. The volatility in revenue inflows will adversely affect planning and expenditure of government and thus likely hamper efforts at stimulating growth and development.”
NEITI review further showed that a total of N513bn was spent on debt servicing by the three tiers in the first quarter of 2017. This was against the N1.276tn disbursements in the first quarter, adding that this meant that debt servicing took up 40.27 per cent of the FAAC disbursement for the first quarter of this year.
It said, “The figure reveals that debt servicing as proportion of total FAAC allocations is generally higher in the first quarter of the year, after which it falls to lower levels. Based on this, the figure of 40.27 per cent observed in the first quarter of 2017 might be an upper threshold and it would thus be expected that this figure will be lower for the remaining quarters of the year.”
It, however, noted that the Debt Management Office had yet to provide data on the figure for the second quarter of 2017.
NEITI expressed concern that the nation’s debt in relation to revenues appeared to have reached critical levels.
It further disclosed that domestic debt servicing constituted 90 per cent of total debt servicing.
It said, “Domestic debt servicing consistently outstrips external debt servicing. In the first quarter of 2015, domestic debt servicing made up over 93 per cent of total debt servicing. This figure did not change much by the first quarter of 2017 as domestic debt servicing was over 92 per cent of total debt servicing.”
On the Paris Club debt refund to the 36 states and Federal Capital Territory, the NEITI Quarterly Review confirmed that N760.18bn was released by the Federal Government to the states and the FCT.