Clement Nwoji
16 November 2009
Abuja — The Federation Account Allocation Committee (FAAC) has approved N121.3 billion excess crude proceeds for disbursement to the three tiers of government for budget augmentation for October 2009.
The sharing came on the heels of the shortfall of N65.789 billion from the expected budget revenue of N291.190 bill for the month under review.
The distributable statutory revenue for the month amounted to N165.623 billion based on the budgeted exchange rate of N125 per dollar showing a decrease of N69.498 billion or 29.56 percent compared to that of September, 2009.
The Minister of State for Finance, Mr. Remi Babalola, who made these disclosures at the end of the FAAC meeting, explained that the decrease was attributed to decline in oil production as a result of shutdown of facilities earlier repaired at Escravos and Forcados terminals, following the discovery of more sabotage points as well as force majeure in Amenam, Bonny and Forcados terminals.
In addition, the Minister said the sum of N27.673 billion was recommended for distribution being exchange gain for the month. The total revenue distributable for the month including VAT is N354.302 billion. This shows an increase of N3.581 billion or 1.02 per cent compared to the amount distributed in September, 2009".
According to a communiqué released at the end of the FAAC meeting and endorsed by the Accountant-General of the Federation, Alhaji Ibrahim Dankwabo, the sectorial breakdown of funds available for distribution for October 2009 indicated that mineral revenue generated N138.511 billion while non-mineral revenue amounted to N86.890, bringing the total to N225.401 billion.
Also, in the same month, the total revenue accruing from the Value Added Tax (VAT) was N39.778 billion as against N36.529 billion distributed in the preceding month, resulting to an increase of N3.249 billion.
Babalola, who presided over the FAAC meeting, advised the three tiers of government to adopt some strategic structural reforms to help them sustain economic recovery over the medium-term and particularly protect those tiers that are most vulnerable.
He expressed optimism on the nation's economic recovery, especially in oil production, crude oil price rebound as well as the accommodative monetary policy of the monetary authorities.
According to the minister, the Bonny light price has increased 70 per cent, closing at $79 per barrel even as he said the production level was improving and gradually approaching the country's OPEC quota level. The major risk and constraint to the economic buoyancy in the short-run is the contraction of the credit squeeze.
"We therefore call on our money centre banks to resume prudent lending immediately as their pivotal role in bolstering the economy cannot be overemphasised. The automatic fiscal policy inherent in our budgetary system and discretionary fiscal stimulus from excess crude releases cannot replace financial intermediation. "It is only lending activities to small and medium enterprises that can engender growth for the real sector in the long-run and not an unsustainable fiscal stimulant," he said.
He explained that the adoption of structural reforms by all levels of government combined with the government's expansionary fiscal policies would help to protect some tiers of government that are most vulnerable.
He said, "Investment in infrastructure, institutions, the environment and basic health and education combined with greater cooperation and integration, will help make that happen.
"I believe we can all rise to the challenge and build a stronger, stable, more equitable and more prosperous future with opportunities to participate and benefit from growth extending to all our citizens".
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