- Buhari Sources $150m from NSIA to Augment As FAAC Receipts Decline by Half
Nigeria’s Finance Minister, Zainab Ahmed has said the Federation Accounts Allocation Committee (FAAC) monthly disbursements is expected to drop to N400bn over the next three months.
Due to the disturbing development, Ahmed issued a warning, asking the country to prepare for the stubborn headwinds ahead following the free fall in global oil prices occasioned by the Russia-Saudi oil price war vis-a-vis the Coronavirus pandemic.
According to her, the ideally projected amount for the monthly disbursements was N888bn, but that has dropped to N716bn in recent months. It further dropped to as low as N581bn in March 2020, marking a record low in many months.
Most states in Nigeria depend on FAAC disbursements and internally generated revenue to run government and meet up with such obligations like salary payments.
Zainab disclosed that for the federal government to meet up with its monthly disbursements, President Muhammadu Buhari has directed that $150 million be withdrawn from the National Sovereign Investment Authority (NSIA).
Addressing journalists in Abuja on Monday, Ahmed stated that the withdrawal would be made from the NSIA stabilisation fund to augment disbursements by the federation accounts allocation committee to the three tiers of government for June 2020.
“Monthly federation accounts disbursements to the federal governments and the state government are ideally projected to have been N888 billion. Due to the significant drop in crude oil prices, FAAC monthly disbursements have declined in recent months to 716 billion in January, N647 billion in February and further down to N581 billion in March 2020,” she said.
“Our experience shows that monthly average FAAC receipts should be at N650 billion to allow the federal and state government to meet their current obligations in a healthy manner.
“Unfortunately, we project that monthly receipts may decline to as low as N400 billion over the next three to six months. To address this emerging fiscal risks, the president has approved that the sum of $150 million be withdrawn from the Nigerian Sovereign Investment Authority stabilisation fund to support the June 2020 FAAC disbursements.
“The fund was created for such emergencies and is to be utilised for this purpose.”
The minister added that the federal government is exploring other options to augment FAAC disbursements over the course of the year.
The NSIA stabilisation fund accounts for 20% of the assets held by the authority.
According to the NSIA on its website, the fund will provide “stabilisation support to the federation revenue in times of economic stress.” However, it is not clear how government hopes to sustain the sourcing of funds from the NSIA in the coming months, especially in face of dwindling revenue caused by the COVID-19 crisis.
The Nigeria Sovereign Investment Authority is the manager of Nigeria’s Sovereign Wealth Fund. It was established as independent agency by an act of the National Assembly in May 2011. The bill was assented to by former President Goodluck Ebele Jonathan on May 26, 2011 and subsequently had it gazetted on June 3, 2011.
Efforts by this reporter to reach the CEO of NSIA, Mr Uche Orji were unsuccessful as repeated calls to his phone rang out.
