Disbursements from the Federation Account to the three tiers of government crashed by 30 per cent in the first half of 2016 when compared to the corresponding half of last year.
A new report by the Nigeria Extractive Industries Transparency Initiative, NEITI, revealed. NEITI has also warned that the sharp drop in revenues may negatively impact budget implementation across the three tiers of government this year, increase the size of budget deficits, and deepen the debt burden.
This is contained in a report titled: FAAC Disbursements in First Half of 2016 and Possible Implications, released yesterday in Abuja. The report is the maiden issue of the NEITI Quarterly Review, a publication that will focus on issues around transparent and accountable management of revenues from the extractive sector.
Undertaken pursuant to Section 3(i) (j) of NEITI Act 2007, the report analysed disbursements by the Federation Accounts Allocation Committee (FAAC) in the first halves of last year and this year, and highlighted possible implications for public governance and management in the country.
According to the report, revenues shared to the three tiers of government were less by over N800billion from N2.89billion last year to N2.01billion this year. This 30 per cent decline reflected in lower allocations across the board.
The report stated: “Total disbursements to the Federal Government fell from N1.23 trillion in the first half of 2015 to N854 billion in the first half of 2016. This represents a 30.9 per cent decline. Total disbursements to states fell by 30.5 per cent from N1.009trillion in the first half of 2015 to N701billion in the first half of 2016. For local governments, allocations from FAAC (Federation Account Allocation Committee) dropped by 26 per cent from N580.63billion to N429.43billion.”
The reasons for the plunge in allocations, according to NEITI, include the drastic fall in oil prices, lower oil production due to the activities of Niger Delta militants, and lower non-oil revenues as a result of lower taxes arising from contraction in government spending, fall in consumption and investment expenditures and decline in economic activities.
