Monday, October19, 2020 09:43 AM /by FBNQuest Research/ Header ImageCredit:  FBNQuest 

Thegross monthly payout by the Federation Account Allocation Committee (FAAC) tothe three government tiers and eligible agencies was N640bn (US$1.66bn) inOctober (from September revenue). This was a decline of N40bn on the previousmonth. From the limited coverage in the local media we learnt that receiptsfrom companies' income tax (CIT), and oil and gas royalties were sharply loweron the month, that the take from import duty and VAT was marginally down andthat collections from excise duty and petroleum profit tax were higher. Stategovernments received a total of N222bn including derivation.

Thereceipts in the federation account consisted of N342bn for the gross statutorydistribution, the lowest since May 2017, N142bn out of the VAT Pool and thebalance of N156bn from a combination of fx equalization, non-oil excess revenueand an FGN intervention.

Thesharp fall in statutory revenue is an obvious concern, not least for theread-across to the state of the underlying economy. While there could beanomalies due to the impact of the Covid-19 virus on tax gathering, we shouldalso recall that September is generally a strong month for the collection ofCIT and that this generated N203bn in the month in 2019.

Thetrend in the gross annual payout has been positive: from N5.82trn in 2015 toN8.52trn in 2018 before a small drop to N8.22trn last year.

However, the spending of states has alsosoared. They spent an average of N396bn per month in 2019, compared with N351bnthe previous year. Such outlays are far above their monthly receipts from theFAAC payout. For a small number of states, internally generated revenueprovides a substantial additional inflow. In the case of Lagos, this revenuewas four times its payout in H2 2020.

DownloadHere - 2020 State ofStates Report by BudgIT

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