States in dilemma as FG’s earnings dip

May 13, 2019
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By Odunewu Segun

Majority of the states of the federation are in serious dilemma over how to fund their 2019 budgets following the drop in the earnings of the federal government in recent times.

In the latest issue of the Quarterly Review of the Nigeria Extractive Industries Transparency Initiative (NEITI), the budget presented by 35 states this year cannot be funded adequately.

According to NEITI, even if the net FAAC disbursements to each state in 2017 and 2018 are combined, the funds will still not be enough.

As usual, both the Federal Government and the States will, once again, depend on external borrowings to fund their budgets. This is despite condemnation that allocations to some ministries and projects which are said to be fraudulent.

Findings show that the Federation Allocation Account Committee (FAAC) recorded a drop of 0.45 per cent in its disbursement between January and March, 2019 after posting N1.929 trillion when compared to the N1.938 trillion it posted during the same period in 2018.

The 0.45 percent recorded in the disbursement for the first quarter of 2019 is blamed on the fall in oil prices. This slightly affected the earnings of the Federal Government.

According to report, the Federal Government received N803.18 billion in the first quarter of the year, 1.18 percent lower than the N812.8 billion it received in the same period in 2018. When compared to the N549.1 billion disbursed in corresponding quarters of 2017, it’s 46.2 percent higher.

The drop means in the first quarter of this year, 36 states shared N675.2 billion. This is a 1.19 percent decline when compared to the N683.4 billion disbursed to the states in Q1 2018. However, it is 48 percent higher than the N456 billion disbursed in Q1 2017.

The report showed that while FG and the States recorded a decline in their disbursement in the first quarter of 2019, the Local Governments recorded an increase of 1.28 percent when compared to N393.4 billion disbursed in the first quarter of last year. This means that the LGA’s disbursement is 47.8 percent higher than the amount disbursed to them in Q1 2017.

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