The Federation Accounts Allocation Committee (FAAC) meeting which took place yesterday, presented the lowest FAAC in over 5 years, with less than N300bn in revenue driven by the impact of the historically low oil prices in January and February. This sum also reflects a seasonally low collection period for the Federal Inland Revenue Service (FIRS).
With about 27 states currently experiencing challenges meeting their salary payments and in response to the above, obligatory repayments due to the Federal Government from the states in respect of their restructured loan obligations are being deferred for the current month. The deferral amounts to a total of N10.9 billion. This is to ensure that the states are in a better position to meet their salary obligations. We are not able to guarantee that all states will be able to meet their salary obligations, as each state's situation is dependent on its own cost profile and other obligations it may have, but this initiative is to better position them to do so.
All states will receive the relief this month, however further deferrals will be subject to the agreement of a Fiscal Restructuring Plan to be prepared by each state with clear measurable objectives. The Federal Ministry of Finance is keen to ensure that the programme of Financial Discipline being driven by the FG is replicated in all tiers of government, including elimination of payroll fraud and increased spending efficiencies in overhead. Enhanced financial transparency by the publication of audited accounts and submission of debt profile may also be required. Moving states towards fiscally sustainable practices is a key objective of the FG to ensure that Nigeria recovers from the current economic challenges.
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