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The sum of N4.174 trillion and $5.5 billion were distributed from the Federation Account and Foreign Excess Crude Account respectively among the three tiers of government in 2009. Finance Minister of State, Mr. Remi BabalolaBabalola disclosed this while presiding over the meeting of the Federation Account Allocation Committee (FAAC) held in Abuja in January 2010.
He explained that last year’s release from the Federation Account was the highest injection into the system within a fiscal year in the last 10 years.
“This Committee in 2009 distributed to the various tiers of government a total of N2,831 billion as Statutory revenue allocation, N449.644 billion as revenue from Value Added Tax, N735.017 billion as augmentation for shortfalls in the budgeted revenue, N158.679 billion as exchange gain difference between the prevailing exchange rate and the budgeted exchange rate, while a total sum of US$5.5 billion dollars was distributed from the Foreign Excess Crude Account,” he said.
In his speech titled “Commencing the Decade with Optimism and Courage”, Babalola was upbeat about the outlook for 2010.
He disclosed that the country’s macroeconomic environment remained bright with a very promising and reasonable macroeconomic stability, especially with the on-going reintegration and rehabilitation of former militants, and sustained improvement in the price and production of oil.
“The outlook for the fiscal year 2010 is predicated on some basic assumptions. These include: Oil production of 2.088 million barrels per day, benchmark oil price of US$57/barrel, Joint Venture cash calls of US$5 billion, average exchange rate of N150 to the US dollar, and target Gross Domestic Product (GDP) growth rate of 6.1 per cent.
“The target inflation rate is 11.2 per cent and there is a deliberate expansion in budgeted expenditure by about 31.5 per cent to counter the effect of the credit crunch on the economy as well as to reduce the infrastructure gap,” the minister stated.
He stressed the need for all tiers of government to be “cautious though pragmatic” with the current $80 per barrel spot price of Nigeria ’s reference oil.
He noted that the high oil price was being driven by the low value of the US dollar and the low interest rates in the United States of America .
“The downside risk is still very high and there is need to be cautious though pragmatic,” he added.
He reiterated that the current post consolidation banking reform was aimed at strengthening the banking system to forestall systemic crisis.
“The year 2009 will be remembered for extreme volatility and dysfunction in the financial system, particularly private sector credit which serves businesses and households.
“In the banking sector, a posture of risk aversion or at best extreme credit caution persists, thus crippling most businesses and with under-developed debt capital market as well as equity market in hibernation, working capital virtually disappeared.”
He disclosed that the Federal Ministry of Finance was collaborating with the monetary authorities in ensuring long-run soundness and stability of the financial system.
He restated his call for a quick exit from the financial institutions rescued with public funds so as to deepen trust and confidence in our financial system.
“In recognition of the imperatives of a strong and robust banking sector to accelerate economic recovery, measures have been put in place to restore the viability of the sector, especially with the Asset Management Company initiative to assist in restructuring and further improving the balance sheets of banks, and enhance the flow of credit to the real sector to boost growth and development of the economy.
“In 2010, appropriate measures to enhance and sustain macroeconomic stability, the soundness of the financial sector, improvement of public expenditure management as well as the growth and diversification of the economy are being put in place.”
Meanwhile, Babalola revealed that FAAC approved the sharing of N370.313 billion among federal, state and local governments from the total revenue generated in December 2009.
He gave the breakdown of the distribution as: Statutory Allocation, N235.67 billion; Value Added Tax (VAT), N42.923 billion; budget augmentation disbursement, N51.85 billion and exchange rate difference of N39.87 billion.
The three tiers of government had last month shared N373.571 billion from the Federation Account. The amount was made up of Statutory Allocation of N286.93 billion; VAT of N38.014 billion; and exchange rate difference of N48.627 billion.