See more as FG deducts Rivers, other states allocations to pay foreign debt

• The Federal Government of Nigeria has decided to deduct N800bn from authorities allocations for indebtedness servicing
• Lagos State mislaid the highest magnitude followed by Rivers State, Delta states, and besides Bauchi states
• Since President Tinubu came to powerfulness authorities allocations accrued driven by subsidy removal and speech complaint reforms

Legit.ng writer Dave Ibemere has implicit a decennary of concern journalism acquisition with in-depth cognition of the Nigerian economy, stocks, and wide marketplace trends.

The Nigeria Extractive Industries Transparency Initiative (NEITI) has revealed that the Federal Government deducted a important N800 cardinal from authorities allocations successful 2024 to work overseas debts and fulfil different contractual obligations.

FG deducts authorities allocation to wage debt Photo credit: Presidency
Source: Getty Images

This deduction disclosed successful NEITI's quarterly reappraisal released connected Tuesday, March 18 showed the fiscal strain faced by states contempt record-high disbursements from the Federation Accounts Allocation Committee (FAAC).

According to Obiageli Onuorah NEITI's acting Director of Communication and Stakeholders Management, yjeFAAC allocations surged to N15.26 trillion successful 2024, marking a important 43% summation from the erstwhile year.

This summation was attributed to fiscal reforms specified arsenic the removal of substance subsidies and adjustments successful speech rates.

FG shares implicit N5 trillion

NEITI revealed that the Federal Government received N4.95 trillion, authorities governments were allocated N5.81 trillion, and section governments received N3.77 trillion, Punch reports.

Notably, authorities governments saw the highest percent summation successful allocations, rising by 62% from N3.58 trillion successful 2023 to N5.81 trillion successful 2024.

However, contempt these higher allocations, states experienced immense deductions, chiefly owed to indebtedness servicing obligations.

The N800 cardinal deduction astatine root posed further fiscal pressures, peculiarly impacting states with little gross bases.

Lagos State suffered the highest deduction of N164.7 billion, representing implicit 20% of the full deductions.

Followed by Kaduna with N51.2 billion, Rivers with N38.6 billion, and Bauchi with N37.2 billion.

Lagos authorities allocation recorded the highest deduction to wage debts. Credit: Presidency
Source: Twitter

Fiscal sustainability of states

The study raised concerns astir the fiscal sustainability of states burdened with precocious indebtedness ratios, noting that galore of these states ranked little successful FAAC allocation rankings but higher successful presumption of indebtedness deductions.

NEITI's Executive Secretary, Dr Ogbonnaya Orji, attributed the crisp emergence successful FAAC disbursements to fiscal reforms initiated successful mid-2023, including substance subsidy removal and overseas speech argumentation adjustments, which importantly boosted naira-denominated mineral revenues.

Despite the gross gains, Dr Orji cautioned that these policies besides introduced economical challenges specified arsenic inflationary pressures, escalating indebtedness servicing costs, and fiscal uncertainties for oil-dependent states.

In 2024, Lagos State topped the FAAC allocation database with N531.1 billion, followed by Delta with N450.4 cardinal and Rivers with N349.9 billion.

Conversely, Nasarawa, Ebonyi, and Ekiti received the slightest allocations of N108.3 billion, N110 billion, and N111.9 billion, respectively.

Recommendations from NEITI

On solutions, NEITI recommended urgent measures to mitigate economical risks, including maintaining speech complaint stableness to curb inflation, adopting blimpish crude lipid terms and accumulation estimates to forestall fund shortfalls, and diversifying gross sources beyond lipid and gas.

The bureau stressed the value of enhancing interior gross procreation and promoting fiscal transparency crossed each authorities levels successful alignment with planetary commitments.

The study besides urged stakeholders to leverage its findings for effectual monitoring of authorities expenditure and accountability successful managing nationalist resources.

Top 26 Nigerian states with highest publication to VAT

An earlier study by Legit.ng revealed that implicit 20 Nigerian states accrued their publication to the value-added taxation (VAT) excavation in January this year, comparative to December 2024.

Analysis shows that 26 states recorded a spike successful VAT contributions wrong the period.

VAT is 1 of the cardinal gross sources and is shared among the 3 tiers of authorities via FAAC.

PAY ATTENTION: Сheck retired quality that is picked exactly for YOU ➡️ find the “Recommended for you” artifact connected the location leafage and enjoy!

Source: Legit.ng