FBNQuest, a subsidiary of First Bank of Nigeria Plc, has called for caution in disbursement of the monthly allocations from the federation account by the three tiers of government.
The investment bank said the need to exercise caution has become necessary given the 9.4 percent decline in the gross allocation in December from November and the incessant complain by government at all levels of lack of funds to execute even routine maintenance.
The company noted in its Research note that N130 billion was distributed among the 774 local governments in the country, saying: “We note that N130 billion compared with N145 billion was distributed to local governments; there are 774 of them. Fiscal discipline is required on all government levels, including the local governments. Some struggle with routine maintenance and cite lack of funds as the reason.”
Recall that the gross monthly payout by FAAC to the three tiers of government declined by N66 billion or 9.4 percent to N636 billion (US$1.75bn) in December from N702 billion in November.
The communiqué of the FAAC meeting, released by the accountant-general of the federation, noted that receipts from excise duty increased marginally. Meanwhile, receipts from Value Added Tax (VAT) companies’ income tax, import duty, royalties and petroleum profit tax (PPT) recorded decreases. The balance in the excess crude account stood at US$325 million as at November.
Breakdown showed that the gross payout consisted of the gross statutory allocation of N492 billion, the VAT pool of N90 billion (compared with N105 billion recorded in the previous month and an exchange-rate gain of N785 million. The fees and charges of the collection agencies consumed N16 billion of the total declared, lower than the N19 billion received in the previous month.
The payout to state governments including the 13 percent derivation bonus of N49 billion for oil-producing states amounted to N173 billion compared with N242 billion from November’s distribution.