A Disappointing FAAC Payout

Culled—Proshare

August 24, 2017/FBNQuest Research

The total monthly payout by the Federation Account Allocation Committee (FAAC) to the three tiers of government retreated in August (from July revenues) to N468bn (US$1.53bn) from N652bn.

The payout in July, the highest for 12 months, now seems in the distant past, and the high hopes of a turnaround in non-oil revenue collection have been deflated. We have often noted how the FGN is pinning its plans for capital spending and social interventions on such a turnaround. The debt service burden also threatens to soar out of control.

The commentary from the federal finance ministry noted a sharp fall in the take from companies’ income tax (CIT), citing the expiry of the deadline for filing tax returns. This would suggest that the one-off seasonal boost lasted just one month (the surge in collection announced in June revenues), rather than the usual two (in July and August revenues in 2016).

The FGN’s payout was N193bn. Even when we adjust for its sizeable independent revenue, we are well short of the projection in the 2017 budget of a monthly average of N429bn from all sources.

The figures for mineral revenue tell a marginally better story. The commentary observed that the average crude price had inched upwards from US$50.3/b in June to US$51.1/b, and crude export volumes for the account of the federation by 1.2 million barrels.

The payout to state governments, independent of the 13% bonus of N32bn for oil-producing states, amounted to N131bn.

We have taken the latest payout from the local media. The accountant-general’s office provides the revenue numbers up to December 2016, distributed in January.

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