The Minister of Finance, Budget and National Planning,
Zainab Ahmed, on Monday admitted that Nigeria’s economy was facing a difficult
time, saying states must improve their internally generated revenues.
Ahmed, who stated this in an interview on a daily breakfast
show on the Nigerian Television Authority, Good Morning Nigeria, stated that
the money shared at the March Federation
Account Allocation Committee meeting was short of N50bn.
The minister was speaking on a controversy generated by a
claim by the Edo State Governor, Godwin Obaseki, that the Central Bank of
Nigeria printed N60bn in March to augment the money shared at March FAAC.
But the minister and the CBN Governor last week dismissed Obaseki’s claim.
In the interview on the NTA on Monday, the finance minister
stated the country’s economy was stabilising from the recession, which the
country exited a few months ago.
She, however, added, “These are very difficult challenging
times because revenues are low and the demand for expenditures are very high
understandably because we have to keep intervening to make sure the pandemic is
contained as well as the economic impact it has caused.
“In our case in Nigeria, the crash of the crude oil prices
really hit us very hard in terms of revenue. We have very low revenues, we have
very high expenditures. What we have done so far is just to provide some
stability to make sure salaries are paid, pensions are received every
month; that we send funds to the
judiciary and the legislature; that we meet our debt service obligations.
“That’s what we are doing. It also means we have had to
borrow more than we have planned before the COVID-19 started because we need to
still continue to invest in infrastructure using our national budget. We
borrowed to invest in key projects such as roads, rail, airports, seaports and
several other investments that are required in health and in education and
upgrading the social standards and quality of life of our people and Nigeria is
not unique as several countries of the world went into recession.
“Almost every other country has had to borrow more than it
planned. It means we expanded our deficit very fast in 2020. 2021 is a year
that we see as the year of recovery.”
According to him, government hopes to achieve a growth of
three per cent in 2021, adding that some of the multilateral institutions are
putting it at 2.5 per cent.
She stated, “It is a
very difficult time. I can explain to you how difficult it is, not just for the
Federal Government but also for the states. We see increasing reductions in our
FAAC revenues; FAAC revenues are the revenues that we put together every month,
that are collected from both oil and non-oil sectors from the collection of the
NNPC (Nigerian National Petroleum Corporation) the FIRS (the Federal Inland
Revenue Service) and all other revenues collection agencies.
“ So, FAAC reduces and whenever FAAC reduces, it is a very
difficult situation and in the past one year, we have tried to fall back on
some specific accounts that are meant to be saved; savings that when you have
such a situation, you fall back on the resources and augment.
“So, we take funds based on Mr President’s approval either
from Excess Crude or Stabilisation Account or in some cases, President approved
for us to take funds from LNG (Liquefied Natural Gas) dividends. In the month
of March, we had a shortfall of FAAC that was about N50bn; we didn’t have enough
accrued in any of those accounts other than some N8.5bn that we took from
exchange rate differential account so we added that and we ended up with the
FAAC of N605bn.
“An average FAAC that is healthy for us is N650bn, so it
means we had a shortfall of about N50bn. The states to be honest wanted us to
go and borrow from the central bank to augment FAAC.”
She stated that advice by states was rejected, adding that
the three levels of government were asked to manage what was available.
“So, it was very surprising when we had a sitting governor
saying that the CBN had printed money for FAAC. That was very unfortunate
because it was not true. The FAAC information is published so you can see the
revenue contributed by each of the agency; that is what we shared.
“The states would have wanted us to borrow and augment but
we didn’t do that. And we would make sure we don’t have to do that because it’s
time all of us to go back and do more. A lot of states are trying to do that in
terms of increasing the performance of their internally generated revenues, but
it is difficult to do that at a time when growth is very, very slow.”
“Going forward, what we have been doing in the ministry of
finance, budget and national planning is a plan that we have put in place to
grow revenues. Our revenues have been growing but because the expenditures have
been growing at a pace that is much faster than the revenue growth, the impact
is not felt.gn
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