The Federal Government on Monday rolled out a wide ranging measures aimed at alleviating current revenue shortfalls for governments at all levels and to tackle economic impact of the Covid-19 pandemic.
The Minister of Finance, Budget & National Planning, Mrs. Zainab Ahmed in a statement in Abuja said due to the expected huge fall in the revenue available to FAAC, the President Muhammadu Buhari has approved the withdrawal of $150 million from the Sovereign Wealth Fund (SWF).
Mrs Ahmed said: “Based on the fiscal assumptions underpinning the 2020 Appropriation Act, monthly Federation Account Allocation Committee (‘FAAC’) disbursements to the Federal and State Governments were projected at N888.5 billion. However, due to the significant drop in international oil prices, FAAC monthly disbursements have declined in recent months to N716.3 billion in January and N647.4 billion in February 2020.
“Our experience shows that monthly average FAAC receipts must average at least N650 billion for the Federal and State Governments to meet their current obligations. Unfortunately, we project that monthly receipts may decline to below N400 billion, over the next 3 to 6 months.
“To address these emerging fiscal risks, Mr. President has approved that the sum of US$150 million be withdrawn from the Nigeria Sovereign Investment Authority (‘NSIA’) Stabilization Fund to support the June 2020 FAAC disbursement. The Stabilization Fund was created for such emergencies and is to be utilized for this purpose. We are also exploring other options to augment FAAC disbursements over the course of the 2020 fiscal year”.
She said government has also revised the oil benchmark for the budget from $57/barrel to $30/barrel and production level from 2.18mpd to 1.7mpd.
On the effort government effort tackle the Covid-19 pandemic, she said: “Although similar challenges were experienced in 2008/2009 as well as in 2015/2016, Nigeria has considerably lower fiscal buffers now than in previous economic downturns.
“The decline in international oil prices and domestic production may be magnified if a severe outbreak of COVID-19 occurs, despite ongoing efforts to curtail the spread of the Pandemic through compulsory lockdown of Lagos and Ogun States, as well as the Federal Capital Territory (FCT).
“To directly address these health and economic challenges, Mr. President has approved the following Fiscal Stimulus Package, as part of an Integrated Policy Framework to ensure that Nigeria’s healthcare system, fiscal position and economy are sufficiently supported to weather these shocks. This Fiscal Stimulus Package comprises various measures as indicated in greater detail below”.
The Finance Minister disclosed that President has also approved the establishment of a N500 billion COVID-19 Crisis Intervention Fund.
“The establishment of this COVID-19 Crisis Intervention Fund will involve drawing much-needed cash resources from various Special Funds and Accounts, in consultation with and with the approval of the National Assembly.
“The N500 billion is proposed to be utilized to:
a) Upgrade healthcare facilities as earlier identified by the Presidential Task Force on COVID-19 and approved by Mr. President;
b) Finance the Federal Government’s Interventions to support States in improving healthcare facilities;
c) Finance the creation of a Special Public Works Programme; and
d) Fund any additional interventions that may be approved by Mr. President”.
She explained that the Nigeria Centre for Disease Control (NCDC) has access to a Regional Disease Surveillance Systems (REDISSE) facility from the World Bank in the sum of US$90 million, out of which US$8 million has been drawn. We have requested to fully draw down on the outstanding balance of US$82 million.
“The Government has also requested for additional financing in the sum of US$100 million from the REDISSE project to meet COVID-19 emergency needs in all the 36 States and the FCT, through the NCDC and Federal Ministry of Health. This will enable us to expand the capacity of intensive Care Units (ICUs), enhance laboratory capacity, accelerate the procurement of test kits, strengthen surveillance mechanisms as well as improve information management”.
She disclosed that “in the interim, Mr. President has approved the restructuring of the Treasury Single Account (TSA) in order to better mobilize cash donations from the generality of our people and corporate bodies across the nation, create flexibility and build a coalition with financial institutions while maintaining the sanctity of the TSA.
“Going forward, the COVID-19 Donor Accounts, which will form part of the existing TSA arrangement shall be opened with the following banks: Zenith Bank, Access Bank, Guaranty Trust Bank, UBA and First Bank”.
