The Federal Government has been asked to caution the rate at which all the proceeds from the Federal allocation are being shared across all tiers of government.
This is according to the Monetary Policy Committee (MPC) of the Central Bank of Nigeria who disclosed this on Friday at the apex bank’s headquarters in Abuja.
The committee headed by the governor of the apex bank, Godwin Emefiele, called on the fiscal authorities to ensure that they build cushions that will help reduce the rising public debt.
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The MPC noted that the rate at which public debt was rising faster than both domestic and external revenue is a major concern that the fiscal authorities should strongly consider.
“The MPC, however, cautioned that public debt was rising faster than both domestic and external revenue, noting the need to tread cautiously in interpreting the debt to GDP ratio.
“The Committee also noted the rising burden of debt services and urged the Fiscal Authorities to strongly consider building buffers by not sharing all the proceeds from the Federation Account at the monthly FAAC meetings to avert a macroeconomic downturn, in the event of an oil price shock.”
The committee noted that the reliance on oil should gradually reduce and the Federal Government should ensure that the cost of governance is reduced.
“Government to gradually reduce reliance on oil receipts and focus on revenue diversification through reforms of the tax system.
“The Committee also called on Government to rationalize fiscal expenditure towards reducing the current excessively high cost of governance.”
In December 2019, a total of N716.298 billion was shared between the Federal Government, States, and Local Government Councils.
According to the Deputy Director, Press and Public Relations, Federation Accounts Allocation Committee (FAAC), Henshaw Ogubike, the total sum comprised revenue from Value Added Tax (VAT), Exchange Gain and the Statutory Revenue.
Ogubike stated that as of January 15, 2020, the balance in the Excess Crude Account (ECA) was $324.968 million.