The three tiers of government – federal, states and local governments – shared N2.788 trillion between January and June this year, Nigeria Extractive Industries Transparency Initiative (NEITI) said yesterday.
According to a statement by NEITI Director of Communications, Dr. Orji Ogbonnaya Orji, the allocation shows a 38 per cent increase on the N2.019 trillion shared in the first half of 2016.
NEITI said the figure is contained in its Quarterly Review, which focuses on disbursement from the Federation Accounts and Allocation Committee (FAAC).
The review was based on data obtained by the agency at the meetings of FAAC and data from National Bureau of Statistics, Office of the Accountant General of the Federation, Federal Ministry of Finance and the Debt Management Office.
Out of $2.788 trillion disbursed in the first half of 2017, the Federal Government received N1.09 trillion, 36 state governments received N923 billion while N549.8 billion went to 774 local governments.
A further breakdown shows that total releases to the three tiers of government was N430.16 billion in January, N514 billion in February, N496.40 billion (March), N418.82 billion (April), N418.82 billion (May) and N462.36 billion (June).
However, despite the 38 per cent increase in disbursements in the first half of 2017 when compared with 2016, the three tiers of government suffered significant revenue decline in terms of projected FAAC disbursement.
“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” the NEITI Quarterly Review observed.
For instance, while the expected FAAC disbursement for the three tiers of government was N4.7 trillion, the actual FAAC disbursement to them was N2.788 trillion, representing a shortfall of over 40.67 per cent.
According to the publication, “the volatility 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”.
The quarterly review added that a total of N513 billion was spent on debt servicing by the three tiers in the first quarter of 2017.
This was against the N1.276 trillion disbursements in the first quarter. This means that debt servicing took up 40.27 per cent of FAAC disbursement for the first quarter of this year.
“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”, the report said. However, the Debt Management Office (DMO) is yet to provide data on the figure for the second quarter of 2017.
In this direction, the NEITI publication expressed concern that the nation’s debt in relation to revenues appears to have reached critical levels. It further noted that domestic debt servicing constituted 90 per cent of total debt servicing.
The report remarked that “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 centof total debt servicing”.
On the Paris Club debt refund to the 36 states and Federal Capital Territory (FCT), the NEITI Quarterly Review confirmed that N760.18 billion was released by the Federal Government to the 36 states and the FCT.
The money, which was paid in two tranches represents refunds of over deductions from FAAC allocations to states and local governments used for quick payment of debt relief granted to Nigeria by the Paris Club between 1995 and 2002.
The NEITI publication disclosed that Rivers received the highest amount of N44.93 billion followed by Delta with N37.61billion and Akwa Ibom N35.98 billion. Bayelsa got N34.9 billion and Kano State received N31.74 billion. The Federal Capital Territory, Abuja received the lowest amount of N2.05 billion.
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