FG, states, councils to share $150m from stabilisation fund
• As states get debt, interest moratorium FG, CBN loans
With monthly federation account receipts projected to fall below N400 billion because of coronavirus pandemic and fallen price of crude oil, President Muhammadu Buhari has approved the withdrawal of $150 billion from the Sovereign Wealth Fund to be shared by Federation Account Allocation Committee (FAAC) in June.
Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, said at a press conference in Abuja, on Monday, that her ministry should engage with the CBN to agree on a debt and interest moratorium for states on Federal Government and CBN-funded loan.
She said based on the fiscal assumptions underpinning the 2020 Appropriation Act, FAAC disbursements to federal and state governments were projected at N888.5 billion.
“However, due to the significant drop in international oil prices, FAAC monthly disbursements have declined in recent months to N716.3 billion in January and N647.4 billion in February 2020.
“Our experience shows that monthly average FAAC receipts must average at least N650 billion for the Federal and State Governments to meet their current obligations.
“Unfortunately, we project that monthly receipts may decline to below N400 billion, over the next 3 to 6 months.
“To address these emerging fiscal risks, Mr President has approved that the sum of US$150 million is withdrawn from the Nigeria Sovereign Investment Authority (NSIA) Stabilisation Fund to support the June 2020 FAAC disbursement.
“The Stabilisation Fund was created for such emergencies and is to be utilized for this purpose. We are also exploring other options to augment FAAC disbursements over the course of the 2020 fiscal year.”
Ahmed said once monthly average FAAC receipts fall below a specific threshold, interest and capital payments by states shall be suspended till monthly average FAAC receipts exceed the threshold.
The responses to the COVID-19 Pandemic and the impact of the 14-days lockdown will have a significant impact on the transportation, distribution and availability of essential food items and medical supplies.
She explained that in the interim, Buhari has approved the restructuring of the Treasury Single Account (TSA) in order to better mobilise cash donations from the generality of our people and corporate bodies across the nation, create flexibility and build a coalition with financial institutions while maintaining the sanctity of the TSA.
The minister will also issue circulars and Ministerial Orders to ensure that charitable donations by benevolent companies to support of COVID-19 pandemic efforts were tax-deductible, pursuant to Section 25 of the Companies Income Tax Act.
On the 2020 budget, Ahmed said with basic fiscal assumptions becoming unrealistic, “we are therefore revising the benchmark oil price for 2020 to US$30/barrel and oil production to 1.7mbpd.
“We have similarly had to adjust downwards our non-oil revenue projections including various tax and customs receipts, as well as proceeds of privatisation exercises.
“In this regard, the Budget Office is currently working on a revised 2020 – 2022 Medium-Term Expenditure Framework / Fiscal Strategy Paper (MTEF/FSP) as well as an Amendment to the 2020 Appropriation Act.
“The proposed Amended Budget will provide for the COVID-19 Crisis Intervention Fund and other adjustments required due to the decline in international oil prices.”