Godwin Emefiele, governor of the Central Bank of Nigeria (CBN), says the federation account allocation committee (FAAC) revenue shared among the three tiers of government should be reduced.
Emefiele made the recommendation while addressing journalists after the first monetary policy committee (MPC) meeting in Abuja on Wednesday.
He said the revenue can be used to protect the economy against future oil price shocks.
Representatives of the three tiers of government meet in Abuja every month to share the revenue generated in the previous month.
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“The monetary policy committee observed the increasing monetisation of oil proceeds as evidenced in the growing FAAC distribution relative to the 2017 levels of disbursement,” he said.
“The committee observed the continued rise in oil prices but acknowledged the inherent volatility in commodity prices and urged the bank not to relent in building external reserves buffers against any future price downturns as a means of sustaining the investor confidence in the economy.
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“Committee urged the government to initiate strong stabilisation programmes and to freeze the growth in its aggregate expenditure and FAAC distributions in order to create savings badly needed to stabilise the economy against future oil price related shocks.”
An analysis of the 2017 FAAC allocations by TheCable showed that 34 states were largely dependent on the disbursements — accounting for more than 80 percent of internally generated revenue for some states.
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