States rule out borrowing to bridge funding gap

State governments have ruled out borrowing to bridge funding gaps currently incapacitating from meeting their basic financial obligations.

Addressing journalists at the end of the monthly Federation Account Allocation Committee Meeting (FAAC) meeting in Abuja, Chairman of the Finance Commissioners forum, Mr Mahmood Yunusa of Adamawa state disclosed that “states are not looking at borrowing to augment the funding gaps.”

State governments, he said, are 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 so that at the end of the day, states will make more money.”

Earlier, Accountant General of the Federation Mr. Idris Ahmed disclosed that “the total revenue distributable for the month of September including VAT was N558.082 billion.

From this amount, the federal government pocketed N234.286 billion, states and the Federal Capital Territory (FCT) got, N152.739 billion, local governments’ councils received N114.918 billion. Oil mineral producing states got an additional N40.216 billion under the 13% derivation principle.

Idris Ahmed noted that gross statutory revenue of N423.961 billion received for the month was lower than the N550.992 billion received in the previous month by N127.023 billion.

The AGF noted 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. However, the average price of crude oil decreased from $50.44 to $46.29 per barrel.”

Idris Ahmed added 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 he said recorded significant increase in the month under review but there was considerable decline decline in revenue from company’s Income tax, petroleum profit tax, import duty and VAT.”

It was also revealed that the balance in the Excess Crude Account (ECA) still stands at $2.309 billion while the balance in the excess account stands at $68 million as at 20th October, 2017.

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