The total gross monthly payout by the Federation Account Allocation Committee (FAAC) to the three tiers of government amounted to N660bn (US$2.15bn) in February (from January revenues). The figure includes a distribution of N50bn from the fx equalization fund, for which the go-ahead from the federal finance minister was pending, yet anticipated, at the end of the committee’s meeting last week. It amounts to a small increase of N11bn on the month. The brief commentary from the OAGF noted that crude sales for the federation account were US$150m above the previous month.
- It also noted a small decline in receipts from companies’ income tax (CIT) and petroleum profits tax. CIT flows tend to peak in mid-year.
- On top of the gross statutory allocation of N505bn, a payment of N104bn was authorized from the VAT Pool (as well as the pending monies).
- In our search for positives, we note the broad upward trend in VAT collection. The comparable figure the previous month was N100bn, and the average in the 12 months to October 2018 was N89bn. The trend might appear to vindicate the focus of the FGN on expanding the base of taxpayers although a doubling of the standard rate of 5% would, as we have often said, have a far more dramatic impact on its capacity to support economic diversification.
- A more substantial point is that the latest payout for the state governments of N171bn (including the 13% derivation for the lucky few but not their share of the pending N50bn) remains short of their average monthly spending in aggregate in 2017 on recurrent items (notably salaries) of N221bn
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Revenue allocations (gross) by the FAAC (N bn)
Sources: Office of the accountant-general of the federation (OAGF); local media; FBNQuest Capital Research
- We understand that there has been a further drawdown from the excess crude account of (ECA) of US$380m since the previous meeting, leaving a balance of just US$250m.
