The Nigerian government has missed another chance to build economic buffers with the current declining trend in crude oil prices, thus failing to heed the advice of the Monetary Policy Committee of the Central Bank of Nigeria (CBN) and leaving the country little protection to cushion the
effects of economic volatilities during hard times.
Instead, the Muhammadu Buhari-led government has distributed every revenue earned and also crashed the savings in the Excess Crude Account (ECA), most which it inherited from the previous administration.
Recall that the MPC had at its July meeting warned the Federal Government to take advantage of improved crude oil prices and save for the rainy day in the interest of the country.
However, available data indicates that while prices of crude oil increased in 2017 and 2018, the monthly allocation to various levels of government also increased, proving that government of the day was not conscious of saving for the rainy day.
The national, sub-nationals and local governments in the country have distributed no less than N7.8 trillion from federal allocations disbursed by the Federation Account Allocation Committee (FAAC) between January and November 2018, according to data compiled by business a.m.
This is already 22 per cent higher than total FAAC disbursements for the whole of 2017.
In 2017, FAAC disbursed a total sum of N6.418 trillion to the national, sub-nationals and local governments which showed an increase of 25.8 percent and 6.8 percent when compared to total disbursements of N5.1 trillion and N6.011 trillion in 2016 and 2015 respectively.
A breakdown of the 2018 figures showed that FAAC disbursed a total of N3.946 trillion in the first half of 2018 to national, sub-nationals and local governments, an increase of 41.4 per cent compared to N2.788 trillion disbursed in the first half of 2017 and 95.4 per cent higher than the N2.019 trillion disbursed in the first half of 2016.
The FAAC shared a total of N2.28 trillion among the three tiers of government in the third quarter of 2018. In October and November it shared N788 billion and N815 billion respectively.
Besides these, the federal government also disbursed N760.18 billion to the 36 sub-nationals in 2017 as Paris Club loan refunds, and from the latest withdrawal from the ECA, is about to disburse another $1.68 billion. Government said it had approved the sum of $2.68 billion as final
payment to states for the Paris Club Refund.
In one fell swoop, the government crashed the balance in the ECA to $631 million with the withdrawal of $1.68 billion in one month, leaving the country to face future financial challenge with little to fall back on.
Available data indicates that the current administration inherited an ECA balance of $2.078 billion in May 2015. Though it managed to raise the balance to $2.319 billion in November, it has also crashed it to $631 million and may not be able to add to it in view of the current revenues