State and Local Govts | |
State and Local Govts | |
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Monday, October
19, 2020 09:43 AM /by FBNQuest Research/ Header Image
Credit: FBNQuest
The
gross monthly payout by the Federation Account Allocation Committee (FAAC) to
the three government tiers and eligible agencies was N640bn (US$1.66bn) in
October (from September revenue). This was a decline of N40bn on the previous
month. From the limited coverage in the local media we learnt that receipts
from companies' income tax (CIT), and oil and gas royalties were sharply lower
on the month, that the take from import duty and VAT was marginally down and
that collections from excise duty and petroleum profit tax were higher. State
governments received a total of N222bn including derivation.
The
receipts in the federation account consisted of N342bn for the gross statutory
distribution, the lowest since May 2017, N142bn out of the VAT Pool and the
balance of N156bn from a combination of fx equalization, non-oil excess revenue
and an FGN intervention.
The
sharp fall in statutory revenue is an obvious concern, not least for the
read-across to the state of the underlying economy. While there could be
anomalies due to the impact of the Covid-19 virus on tax gathering, we should
also recall that September is generally a strong month for the collection of
CIT and that this generated N203bn in the month in 2019.
The
trend in the gross annual payout has been positive: from N5.82trn in 2015 to
N8.52trn in 2018 before a small drop to N8.22trn last year.
Revenue allocations (gross) by the
FAAC (N bn)
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Sources: Office of the accountant-general of the
federation (OAGF); local media; CBN; FBNQuest Capital Research |
However, the spending of states has also
soared. They spent an average of N396bn per month in 2019, compared with N351bn
the previous year. Such outlays are far above their monthly receipts from the
FAAC payout. For a small number of states, internally generated revenue
provides a substantial additional inflow. In the case of Lagos, this revenue
was four times its payout in H2 2020.
Download
Here - 2020 State of
States Report by BudgIT
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