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Economic Confidential, February
17,
2008
Finally President Yar’Adua Stops All Payments
in Dollars from Federation Account
President Umar Musa Yar’Adua has finally directed a stoppage of
dollar allocation in whatever form from the Federation Account to
the tiers of government. The Economic Confidential
gathered that the action is to douse the controversy over the
propriety and constitutional implication of sharing in US dollars
about $4billion of Excess Crude Revenue which was recommended by the
National Economic Council.
The Economic Confidential journal confirmed that the
President gave the directive last week at a meeting with major
organs of government responsible for formulation of fiscal and
monetary policies in the country. Apart from the Minister of
Finance, Dr. Shamsudeen Usman, those present at the meeting were the
Chairman Revenue Mobilisation Allocation and Fiscal Commission,
Engr. Hamman Tukur; Governor of Central Bank of Nigeria; Prof.
Chukwuma Soludo; Accountant General of the Federation, Mr. Ibrahim
Dankwambo, amongst other top functionaries.
The President, who was concerned over the controversy on the sharing
of $4billion from the Excess Crude Account and its constitutional
implication, had summoned the emergency meeting at the Presidential
Villa. After listening to arguments of the policy makers, he sought
the legal opinion of the Attorney General of the Federation, Michael
Kaase Aondoakaa who was also at the meeting.
The decision to suspend the allocation in dollars was based on legal
and constitutional provisions which give preference for the
promotion of local legal tenders in the country. The meeting also
decided that Local Government Councils which were early excluded in
the publicized ratio of 80:20 in favour of states and federal
government respectively, must also benefit from such allocation as
constitutionally recognized tiers of government.
With the new decision the next monthly Federation Account Allocation
Committee FAAC (which is coming up on February 18 - 19 2008 in Abuja
will reflect the new decision. There is also the likelihood that the
FAAC may also adopt new revenue indices for sharing of statutory
allocations to states and local governments on the basis of
developmental factors which was recently approved by the Revenue
Mobilisation Allocation and Fiscal Commission. The factors include
school enrolments, hospital bed, population, IGR, road networks
amongst others.
It will be recalled that a day before the meeting in the Villa, a
national daily had reported that a formal letter was issued by the
Presidency to stop distribution of the statutory allocation in
dollars which does not affect other payments like the excess crude.
The paper added that “the $4 billion excess crude oil revenue would
be paid in US dollars as agreed by the National Economic Council.”
With the latest development no allocation would be shared in any
foreign currency unless there is an amendment to the 1999
Constitution. At the monthly meeting of the Federation Account
Allocation Committee, only Statutory Allocation and VAT are
disbursed with occasional additions from Excess Crude Account.
It may be recalled that two week ago the National Economic Council,
an advisory body chaired by the Vice President Goodluck Jonathan
with governors of the 36 states as members had announced that $4.017
billion excess crude oil revenue would be paid in US dollars to
states and federal government at a ratio of 80:20 respectively. It
was supposed to be paid like the $1.8 billion refunds from excess
deductions from the Paris Club exit settlement to states in December
2007 which was done in dollars by the apex bank. It was reported
that the payment would come in three installments, with the first
installment coming before the end of February and the remaining
installments coming subsequently at two months intervals. It was
argued that the dollar payment was aimed at managing the flow of
naira in the economy which could impact negatively on the inflation
rate.
Other related articles from Economic
Confidential:
WINDFALL- Sharing of Excess Crude and Dollarised Allocations
-States May Receive Dollarized Revenue From Federation Account
Nigeria Earned N1.38 Trillion from Excess Crude in 2007 |
