NEITI: Federal allocations can’t fund half of states’ budget

Nigeria Extractive Industries Transparency Initiative (NEITI) has revealed that allocations from the Federation Account Allocation Committee (FAAC) account cannot fund half of states’ budget.

In its quarterly review released on Monday, NEITI said many states are left with huge deficits due to the insufficiency of federal allocations.

No state has got up to a N100 billion from the federation account in 2016, yet majority of the states have budgets in excess of N100 billion, it said.

For Lagos state, the 2016 budget is above N600 billion, while the state has got less than N100 billion from the account.

The report showed “that the lower disbursements from FAAC seen throughout 2016 will likely have dire consequences for budget implementation of all states of the Federation”.

“It is well-known that virtually all states rely on FAAC disbursements to fund their budgets. However, the dwindling revenue from the petroleum sector, which has led to substantially lower disbursements from the federation account, will limit the ability of states to effectively execute their budgets,” the NEITI report read.

“Most states will incur massive budget deficits in 2016, and it is unlikely that they will be able to fully implement their budgets.”

According to the report, N1.534 trillion was shared by three tiers of government in Q3 of 2016, which represents the the highest quarterly disbursement so far in 2016, though lower than the figure for Q3 of 2015.

“FAAC disbursements to the three tiers of government in the third quarter of the year totaled N1.53 trillion. This represents an 18.6% drop on total disbursements in the third quarter of 2015,” the report read.

Highest monthly FAAC allocation this year was in July, though FAAC monthly allocation in 2016 only surpassed that of 2015 in September 2016.

On the bright side however, value added tax (VAT) rose marginally, in the face of dwindling oil revenues.

“Total VAT disbursements for the first 3 quarters of 2015 was N600.95 billion while a total of N601.53 billion was disbursed for the corresponding periods in 2016. This represents a 0.096% increase from 2015 to 2016.”