A Decline in the December 2019 FAAC Distribution

December 24, 2019/FBNQuest Research

The gross monthly payout by the Federation Account Allocation Committee (FAAC) to the three tiers of government amounted to N636bn (US$1.75bn) in December (from November revenue). This was a decrease of N66bn on the previous month. The communique of the FAAC meeting, released by the accountant-general of the federation, noted that receipts from excise duty increased marginally. Meanwhile, receipts from VAT, companies’ income tax, import duty, royalties and petroleum profit tax (PPT) recorded decreases. The balance in the excess crude account stood at US$325m as at November.                                                                                                                  

The gross payout consisted of the gross statutory allocation of N492bn, the VAT pool of N90bn (compared with N105bn recorded in the previous month) and an exchange-rate gain of N785m. The fees and charges of the collection agencies consumed N16bn of the total declared, lower than the N19bn received in the previous month.

The payout to state governments including the 13% derivation bonus of N49bn for oil-producing states amounted to N173bn, compared with N242bn from November’s distribution.

We note that N130bn (compared with N145bn) was distributed to local governments; there are 774 of them. Fiscal discipline is required on all government levels, including the local governments. Some struggle with routine maintenance and cite lack of funds as the reason.

We have taken the data for the latest payout from local media reports. The accountant-general’s office supplied the revenue numbers up to June 2019, shared out in July.