The Federal Government has admitted that Nigeria is currently facing a difficult time, as revenues are crashing.
The Minister of Finance, Budget and National Planning, Zainab Ahmed, who stated this on Monday on NTA’s breakfast show, urged states to improve their internally generated revenues.
According to her, the money shared at the March Federation Account Allocation Committee meeting was short of N50 billion.
The minister said this in reaction to the controversy generated by a claim by the Governor of Edo State, Godwin Obaseki, that the Central Bank of Nigeria printed N60 billion in March to support the money shared at March FAAC.
But the minister and the CBN Governor had dismissed Obaseki’s claim.
However, Ahmed added that the country’s economy was stabilizing from the recession, which the country exited a few months ago.
She said, “These are very difficult challenging times because revenues are low and the demand for expenditures are very high understandably because we have to keep intervening to make sure the pandemic is contained as well as the economic impact it has caused.
“In our case in Nigeria, the crash of the crude oil prices really hit us very hard in terms of revenue. We have very low revenues, we have very high expenditures. What we have done so far is just to provide some stability to make sure salaries are paid, pensions are received every month; that we send funds to the judiciary and the legislature; that we meet our debt service obligations.
“That’s what we are doing. It also means we have had to borrow more than we have planned before the COVID-19 started because we need to still continue to invest in infrastructure using our national budget. We borrowed to invest in key projects such as roads, rail, airports, seaports and several other investments that are required in health and in education and upgrading the social standards and quality of life of our people and Nigeria is not unique as several countries of the world went into recession.
“Almost every other country has had to borrow more than it planned. It means we expanded our deficit very fast in 2020. 2021 is a year that we see as the year of recovery.
“It is a very difficult time. I can explain to you how difficult it is, not just for the Federal Government but also for the states. We see increasing reductions in our FAAC revenues; FAAC revenues are the revenues that we put together every month, that are collected from both oil and non-oil sectors from the collection of the NNPC (Nigerian National Petroleum Corporation) the FIRS (the Federal Inland Revenue Service) and all other revenues collection agencies.
“ So, FAAC reduces and whenever FAAC reduces, it is a very difficult situation and in the past one year, we have tried to fall back on some specific accounts that are meant to be saved; savings that when you have such a situation, you fall back on the resources and augment.
“So, we take funds based on Mr President’s approval either from Excess Crude or Stabilization Account or in some cases, President approved for us to take funds from LNG (Liquefied Natural Gas) dividends. In the month of March, we had a shortfall of FAAC that was about N50bn; we didn’t have enough accrued in any of those accounts other than some N8.5bn that we took from exchange rate differential account so we added that and we ended up with the FAAC of N605bn.
“An average FAAC that is healthy for us is N650bn, so it means we had a shortfall of about N50bn. The states to be honest wanted us to go and borrow from the central bank to augment FAAC.”
