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Economy

States Pressured us to Borrow from CBN for March Allocation—FG

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By Modupe Gbadeyanka

The last is definitely not heard concerning the revelation by the Governor of Edo State, Mr Godwin Obaseki, that in March 2021, the federal government allegedly printed N50 to N60 billion to augment the allocation shared among the federal, state and local governments.

The Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, who had earlier denied the claims by Mr Obaseki last Wednesday, admitted on Monday that last month, the country had a shortfall of N50 billion from the revenues generated in February 2021 and shared last month.

Mrs Ahmed, in an interview on Good Morning Nigeria programme on the FG-owned Nigerian Television Authority (NTA), stated that, “In the month of March, we had a shortfall of FAAC that was about N50 billion; we didn’t have enough accrued in any of those accounts other than some N8.5 billion that we took from the exchange rate differential account so we added that and we ended up with the FAAC of N605 billion.

“An average FAAC that is healthy for us is N650 billion. So, it means we had a shortfall of about N50 billion. The states, to be honest, wanted us to go and borrow from the Central Bank (of Nigeria) to augment FAAC but we didn’t do that.

“And we would make sure we don’t have to do that because it’s time for all of us to go back and do more. A lot of states are trying to do that in terms of increasing the performance of their internally generated revenues, but it is difficult to do that at a time when growth is very, very slow,” she said.

“So, it was a surprise when we heard a sitting governor saying that the CBN had printed money for FAAC. That was very unfortunate because it was not true. The FAAC information is published so you can see the revenue contributed by each of the agency; that is what we shared,” she added.

The Minister agreed with Governor Obaseki that the country was facing a difficult fiscal problem as a result of low revenue but she blamed this on the COVID-19 pandemic.

“These are very difficult challenging times because revenues are low and the demand for expenditures is 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 had planned before the COVID-19 started because we need to still continue to invest in infrastructure using our capital 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,” she said.

Speaking further, the Minister said, “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 Stabilisation Account or in some cases, President approved for us to take funds from LNG (Liquefied Natural Gas) dividends.”

However, she expressed optimism that the country would bounce back, noting that the government hopes to achieve a growth of 3 per cent in 2021, adding that some of the multilateral institutions are putting it at 2.5 per cent.

Modupe Gbadeyanka is a fast-rising journalist with Business Post Nigeria. Her passion for journalism is amazing. She is willing to learn more with a view to becoming one of the best pen-pushers in Nigeria. Her role models are the duo of CNN's Richard Quest and Christiane Amanpour.

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