States may need bailout to cushion effects of dipping revenues

Factional PDP Reps caucus seeks N5b facility for SMEs

Following the dipping revenues currently available to government on account of the Coronavirus outbreak that had impacted negatively on oil prices at the international market, the states might soon scout for bailout as allocations from the Federation Accounts Allocation Committee (FAAC) nosedive.

With receipts from crude at an all-time low, far below Nigeria’s budget benchmark, the country’s oil-dependent economy has come under more pressure, as workers might be back to economic misery less than three years after the states were bailed out through the Paris Club largesse.

At a point, 27 states were owing workers and pensioners salaries and entitlements ranging from one to 36 months.Indeed, feelers from the Revenue Mobilisation, Allocation and Fiscal Commission (RMAFAC), the Federal Inland Revenue Services (FIRS), the Nigeria Customs Service (NCS) and all other revenue-generating agencies showed that funds to be shared among the three tiers of government had dropped significantly.

FAAC had recommended that any month the net distributable revenues were below N680 billion, money should be withdrawn from the Excess Crude Account to augment the shortfall to meet the minimum peg.

On the other hand, where the money for sharing falls between N680 billion and N730 billion, up to N50 billion should be transferred into the ECA as savings.

Besides, if the monthly’s net distributable revenue is from N730 billion to N830 billion, the committee recommended that up to N100 billion should be transferred to the ECA or a minimum of N150 billion when the figure exceeds N830 billion.

With the free fall of revenues on account of the Coronavirus on oil exports, it was learnt that what was presented for sharing by the Nigerian National Petroleum Corporation (NNPC) and other revenue-generating agencies fell far below the benchmark.

With the Central Bank of Nigeria’s (CBN) Purchasing Managers Index (PMI) showing a slow growth in the manufacturing sector last month at 58.3 index points, a Harvard Business Review report had indicated that the peak of the impact of Covid-19 on global supply chains would occur in mid-March, forcing thousands of companies to throttle down or temporarily shut assembly and manufacturing plants in many countries, including the United States.

In a related development, a faction of the opposition Peoples Democratic Party (PDP) in the House of Representatives has enjoined President Muhammadu Buhari to approve the disbursement of N 5 billion each as business loan to the 36 states to cushion the effects of the pandemic in the country.Leader of the faction, Kingsley Chinda in a statement, said the facility was to boost the small and medium enterprises (SMEs).