Posted by By Omoh Gabriel on
THE Federal Government has received a total of N3.484 trillion as its share of the federation account in the last five years.
THE Federal Government has received a total of N3.484 trillion as its share of the federation account in the last five years.
States and local governments got N3.7 trillion during the period, amounting to a total of N7.25 trillion for the three tiers of government from the common pool-- federation account. This amount is the total net allocation to the various tiers of government in the country after allowance was made for total deductions from states for external and contractual obligations.
Figures released by the Federal Ministry of Finance showed that between June and December 1999, the first six months of this administration, the Federal Government got N154.633 billion while states and local governments combined got N131.655 billion. In 2000, the Federal Government share of the federation account amounted to N531.612 billion as against the N515.451 billion allocated to states and local governments.
According to the figures, in 2001 the federation account rose with the Federal Government receiving N723.920 billion while states and local governments received N662.947 billion. The allocation to the various tiers of government further improved in 2002 as the Federal Government got from the federation account a total of N791.030 billion while states and local governments got N763.109 billion.
In 2003 when the revenue allocation formula was adjusted, the Federal Government had N739.208 billion allocation while states and local governments had N954.687 billion. In the first six months of this year, the Federal Government had a total of N544.289 billion allocation while the other two tiers of government had N739.524 billion.
The boost in government revenue from the federation account rose on account of the favourable condition in the crude oil market where the price has always been above the budget bench mark since the inception of this administration. Part of the allocation is the contentious excess crude revenue. Since assumption of office by the administration five years ago, the average price of crude oil in the international market has been above the budget benchmark.
While the budget was based on $18 or $22, and more recently $25 per barrel, the price of crude has always risen during the period on the average to between $25 and $55 per barrel, thus giving rise to oil windfall sometimes referred to as excess crude oil proceeds.
The proceeds have, most of the time, generated disagreement between the Federal and state governments which clamour for the sharing of the money.
The gains from crude oil earnings and favourable revenue generated by the various tiers of government in Nigeria ordinarily should have enhanced the welfare of Nigerians but this seems not to have impacted positively on the citizenry in terms of improved standard of living which, by current estimate, has gone down as more than 70 per cent of the population are said to be living below one dollar per day.
Available data with the Central Bank of Nigeria showed that in 1999, the Federal Government spent a total of N947.690 billion when Obasanjo took over the Presidency of the country. In 2000, CBN records showed that government had a total expenditure of N701 billion while in 2001 it spent a total of N1.018 trillion. The sum of N1.018 trillion was spent by the Federal Government in 2002 and N1.225 trillion in 2003. But the same government in these years of bumper price from the international oil market has run its affairs on deficit, borrowing huge sums from the money market to finance its expenditure at very high cost.
Alleged profligacy of the Federal Government drew flak from the International Monetary Fund (IMF) and the World Bank which described Nigeria as a country where oil wealth has not benefitted its populace. Despite government's excess earnings from crude oil which is far above successive budget estimates, government, in 1999, incurred a deficit of N285 billion.
CBN data showed that in 2000, government incurred a deficit of Nl 03 billion, N22 1.04 billion in 2002 and in 2003, N301 .4 billion. As a result of this huge deficit financing, despite government earnings, the Federal Government spent a total of N556 billion to service domestic debt. This implied that because a chunk of the money was borrowed from the banking system, government spent a large portion of its yearly recurrent budget in paying domestic as well as external debts.
Financial analysts were worried that much of the country resources is being frittered away on debt servicing. In 2002, government spent N12.4 billion on agriculture, one of its priority sectors, while a total ofN3 3.3 billion was spent on servicing domestic debt. Another priority area of government-- road and construction-- had only N9.27 billion as total expenditure in the recurrent expenditure of government, while health received N50 billion. The organised private sector at various fora has lamented government's poor handling of the economy.
According to the half year review of the economy by NACCIMA, the sluggish growth of the economy witnessed in 2003 has continued in the first half of 2004. The NACCIMA said Nigeria was in dire need of considerable improvement as the performance of macro-economic variables showed that economic recovery had not shown any sign of significant progress.
The private sector umbrella body said that an assessment of the attendant effects of this scenario indicated existence of low productivity, low quality social services, rising rate of unemployment, low social welfare policy programme, tensed industrial relations climate, dysfunctional infra structural facilities, epileptic supply of electricity, frequent increases in prices of petroleum products, insecurity of life and property, high cost of funds, continuous naira depreciation, among others.