States Rule Out Borrowing to Bridge Funding Shortfalls

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Ndubuisi Francis in Abuja
Despite funding shortfalls occasioned by a drop in revenue, the state governments have ruled out borrowing to enable them meet their financial needs.

The Chairman of the Finance Commissioners Forum of the 36 states of the federation,  Mr. Mahmood Yunusa, who gave the hint in Abuja, said: “States are not looking at borrowing to augment the funding gaps.”

Yunusa, who is also the Adamawa State Commissioner for Finance, was responding to questions by journalists at the end of the monthly Federation Account Allocation Committee (FAAC) meeting, said state governments were now looking at cutting costs and working closely with the federal government to increase non-oil revenue, particularly Value Added Tax (VAT), withholding tax and stamp duty.

The Accountant General of the Federation, Mr. Idris Ahmed, who briefed journalists at the end of the meeting, disclosed that “the total revenue distributable for the month of September, including VAT, was N558.082 billion.”

From this, the federal government received N234.286 billion, states and the Federal Capital Territory (FCT) went home, with N152.739 billion while the local governments received N114.918 billion.
The sum of N40.216 billion went to oil mineral producing states under the 13 per cent derivation principle.
According to Idris, gross statutory revenue of N423.961 billion received for the month was lower than the N550.992 billion  in the previous month by N127.023 billion.

He pointed out that “there was significant increase in revenue from export sales of $176.4 million due to an increase in crude oil production by 4.12 million barrels. But the average price of crude oil decreased from $50.44 to $46.29 per barrel, he stated.

The AGF stressed that “activities resumed at Forcados Terminal for the first time since February 2016. There were shut-ins and shut-downs at terminals for maintenance and repairs.”

Oil royalty also recorded significant increase in September, he stated, adding that there was considerable decline in revenue from companies income tax , petroleum profit tax, import duty and VAT.

Idris disclosed that the balance in the Excess Crude Account (ECA) still stands at $2.309 billion while the balance in the excess petroleum profit tax stands at $68 million as at October 20, 2017.