*N760.18bn released to states as Paris Club Refund
*Debt profile on the rise
*Rivers, Delta, Akwa Ibom top list
The Nigeria Extractive Industry Transparency Initiative (NEITI), Sunday disclosed that the three tiers of government (federal, states and local governments) shared a whopping N2.788 trillion between January and June, 2017 even as N513 billion was spent on debt servicing.
NEITI also confirmed the Paris Club refund of N760.18 billion was released to the 36 states and the Federal Capital Territory Abuja.
According to a statement signed by its Director of Communications, Dr Orji Ogbonnaya Orji, the report is contained in a Quarterly Review which focuses on disbursement from the Federation Accounts and Allocation Committee (FAAC).
The data for the review, according to Orji, was obtained from National Bureau of Statistics (NBS), Office of the Accountant General of the Federation, Federal Ministry of Finance and the Debt Management Office (DMO).
A breakdown of the data showed that out of $2.788 trillion disbursed in the first half of 2017, the Federal Government received N1.09 trillion, 36 state governments received N923 billion while N549.8 billion went to 774 local government councils.
A further breakdown shows a decline in revenue when compared with same period in 2016 despite the fact that total releases was N430.16 billion in January, N514 billion in February, N496.40 billion in March, N418.82 billion in April, N418.82 billion in May and N462.36 billion in June 2017.
“However, despite the 38% increase in disbursements in the first half of 2017 when compared with 2016, all the three tiers of government suffered significant revenue decline in terms of projected FAAC disbursement.
“Coupled with the low price of oil is the country’s difficulty in meeting the targeted/budgeted production rate of 2.2 million barrels per day. Production has consistently fallen below two million barrels per day since March 2016. Thus the double “whammy” of low oil prices and lower production that hit the country since 2014 has remained” the NEITI Quarterly Review observed.
According to economic projections, the expected FAAC disbursement was N4.7 trillion, but the actual was N2.788trillion, representing a shortfall of over 40.67%.
The review noted that “the volatility nature of disbursements to all tiers of government in the first half of 2017 would suggest difficulty in implementing budgets at Federal, State and Local government levels. The volatility in revenue inflows will adversely affect planning and expenditure of government and thus likely hamper efforts at stimulating growth and development”.
It further revealed that a total of N513 billion was spent on debt servicing by the three tiers in the first quarter of 2017.
“This was against the N1.276 trillion disbursements in the first quarter. This means that debt servicing took up 40.27% of FAAC disbursement for the first quarter of this year.
“The figure reveals that debt servicing as proportion of total FAAC allocations is generally higher in the first quarter of the year, after which it falls to lower levels. Based on this, the figure of 40.27% observed in the first quarter of 2017 might be an upper threshold and it would thus be expected that this figure will be lower for the remaining quarters of the year”, the Report stated.
On the nation’s actual debt status, the report revealed that DMO is yet to provide data on the figure for the second quarter of 2017, but NEITI is worried that the nation’s debt in relation to revenues raises some concerns and “appears to have reached critical levels”.
The report showed that domestic debt servicing gulped 90% of total debt at the expense of foreign debt servicing, stressing that domestic debt servicing consistently outstrips external debt servicing.
“In the first quarter of 2015, domestic debt servicing made up over 93% of total debt servicing. This figure did not change much by the first quarter of 2017 as domestic debt servicing was over 92% of total debt servicing” stated the report.
The review which also examined the details of the Paris Club refund confirmed that N760.18 billion was released to the 36 states and the Federal Capital Territory Abuja.
The review showed that the refund were made in two tranches with Rivers state receiving the highest share of N44.93 billion followed by Delta with N37.61billion and Akwa Ibom N35.98 billion while Bayelsa got N34.9 billion and Kano N31.74 billion.
The Federal Capital Territory received the lowest amount of N2.05 billion. The Review emphacized that “the Federal Ministry of Finance stressed that the Paris Club releases should be used largely by the States for the payment of workers’ salaries, welfare, and pensions which may have been pending since 2014”.
On the financial status of other government agencies, the report confirmed that “NNPC has completed the refund of N450 billion owed the Federation Account, as a result of portions of domestic crude receipts withheld by the Corporation from November 2004”.
The refund was as a result of diligent implementation of a re-payment schedule worked out between NNPC and FAAC.
“From the NNPC debt refund which commenced since 2011, a total of N206.242 billion was paid to the Federal Government, N151.446 billion was paid to the 36 States and FCT while the 774 local governments collectively received N92.311 billion” the report stated.
Myke Uzendu, Abuja