The Federal Government, on Monday, announced the approval of US$150m withdrawal from the Nigeria Sovereign Investment Authority (NSIA) Stabilization Fund to support the June 2020 FAAC disbursement.
Announcing this at a media briefing, Minister of Finance, Budget and Planning, Mrs. Zainab Ahmed, said the approval by President Muhammadu Buhari is due to the significant drop in international oil prices. This, she continued, has led to the decline in monthly Federation Account Allocation Committee (FAAC) disbursements to the Federal and State Governments, first to N716.3bn in January and N647.4bn in February 2020.
“The Stabilization 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,” she stressed.
The Minister recalled that N888.5bn is the average FAAC disbursement on which the year’s budget was based, adding that the NSIA support has become necessary, with monthly receipts projected to fall below N400bn, over the next three to six months.
Mrs. Ahmed, who was accompanied by Clement Agba, minister of state and other top officials of the Ministry, explained that “experience shows that monthly average FAAC receipts must average at least N650bn for the Federal and State Governments to meet their current obligations.”
The President, she continued, also approved that the Ministry should engage with the Central Bank of Nigeria (CBN) “to agree on a debt and interest moratorium for states on the federal government and CBN-funded loans, in order to create fiscal space for the States, given the projected shortfalls in FAAC allocations.
As part of the proposal, details of which will be worked out for final Presidential approvals she explained that “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.
“This intervention is vital to create fiscal space for the States, as they deal with the health and economic impact of the crisis,” she added.
Mrs. Ahmed expressed appreciation of the overwhelming show of solidarity by public-spirited individuals and corporate bodies towards combating the COVID-19 Pandemic through financial and material contributions.
She assured that the administration will put an adequate framework in place for the collection, management and reporting of these donations, following which he Ministry “is developing a comprehensive framework for the transparent management of the contributions.”
Before then, however, she said the President has approved the restructuring of the Treasury Single Account (TSA), so as to better mobilize cash donations from the public and private sector across the nation. This will be done in a flexible manner, building a coalition with financial institutions while maintaining the sanctity of the Treasury Single Account.
Plans are on, she stressed, to open COVID-19 Donor Accounts, which will form part of the existing TSA arrangement with Zenith Bank, Access Bank, Guaranty Trust Bank, United Bank for Africa; and First Bank.
Such accounts will be linked to the main TSA for ease of monitoring and reporting, adding that “circulars and Ministerial Orders to ensure that charitable donations by benevolent companies to support our COVID-19 Pandemic efforts are tax-deductible, pursuant to Section 25 of the Companies Income Tax Act.”