The Nigeria Extractive Industries Transparency Initiative, NEITI has warned that the nation is on a debt cliff stating that Nigeria’s debt in relation to revenues appears to have reached critical levels.
NEITI, in its just released Quarterly Review which focused on disbursement from the Federation Accounts and Allocation Committee, FAAC, said that a total of N513 billion was spent on debt servicing by the three tiers of government in the first quarter of 2017, compared to total disbursements of N1.276 trillion.
“This means that debt servicing took up 40.27 per cent of FAAC disbursement the the first three months of this year. The figure reveals that debt servicing as proportion of total FAAC allocations is generally higher in the first quarter of the year, after which it falls to lower levels. Based on this, the figure of 40.27 per cent observed in the first quarter of 2017 might be an upper threshold and it would thus be expected that this figure will be lower for the remaining quarters of the year,” NEITI explained.
However, the report noted that the Debt Management Office (DMO) is yet to provide data on the figure for the second quarter of 2017. It added that domestic debt servicing constituted 90 per cent of total debt servicing, explaining that domestic debt servicing consistently outstrips external debt servicing. According to the NEITI report, in the first quarter of 2015, domestic debt servicing made up over 93 per cent of total debt servicing, while the figure did not change much by the first quarter of 2017 as domestic debt servicing was over 92 per cent of total debt servicing.
Also, the report stated that N760.18 billion was released by the Federal government to the 36 states and the Federal Capital Territory Abuja and was paid in two tranches.
According to NEITI, the money represents refunds of over deductions from FAAC allocations to states and local governments used for quick payment of debt relief granted to Nigeria by the Paris Club between 1995 and 2002.
The report disclosed that Rivers received the highest amount of N44.93 billion followed by Delta with N37.61billion and Akwa Ibom N35.98 billion, while Bayelsa got N34.9 billion and Kano state received N31.74 billion respectively. It added that the Federal Capital Territory, Abuja received the lowest amount of N2.05 billion. NEITI further acknowledged the fact that the Nigerian National Petroleum Corporation, NNPC, had completed the refund of N450 billion owed the Federation Account, as a result of portions of domestic crude receipts withheld by the Corporation from November 2004.
It noted that this followed the implementation of a payment schedule worked out between the Corporation and the Federation Allocation Accounts Committee.
It said, “From the NNPC debt refund which commenced since 2011, a total of N206.242 billion was paid to the Federal Government, N151.446 billion was paid to the 36 States and FCT while the 774 local governments collectively received N92.311 billion.”
Furthermore, NEITI disclosed that the three tiers of government, federal, states and local governments, shared N2.788 trillion between January and June this year, a 38 per cent increase on the N2.019 trillion shared in the first half of 2016. Out of $2.788 trillion disbursed in the first half of 2017, it said the Federal Government received N1.09 trillion, 36 state governments received N923 billion while N549.8 billion went to 774 local governments in the country.
“A further breakdown shows that total releases to the three tiers of government was N430.16 billion in January, N514 billion in February, N496.40 billion in March, N418.82 billion in April, N418.82 billion in May and N462.36 billion in June,” NEITI stated.
It said the review was based on data obtained by NEITI at the meetings of FAAC and data from National Bureau of Statistics, Office of the Accountant General of the Federation, Federal Ministry of Finance and the Debt Management Office. It added that its interest in providing timely information and data on the FAAC allocations to the three tiers of government was in line with its mandate to monitor and enthrone transparency in the management of extractive industry revenues.
“NEITI’s is also interested in the FAAC disbursements in view of the fact that over 70 per cent of the funds involved are derived from the extractive sector,” it argued.
