Several state governments have decried increases in the amounts deducted from the Statutory Revenue of the States for repayment of foreign loans due to the rising exchange rate.
As contained in the minutes of the Federal Account Allocation Committee (FAAC) meeting held in March 2024 seen by BusinessDay, the commissioners of finance in Ondo, Ekiti, Ogun, and Cross River states decried the deduction, stating that States might not be able to fund capital projects as a result of a reduction in revenue.
Akintunde Oyebode, the Ekiti state commissioner of finance, who observed the increased deduction, suggested the need for extensive discussion on exchange rates about multilateral financing to address the issue.
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He raised concerns about the amount deducted as savings from the revenue for the month and noted that the balances of the Sub-nationals had reduced tremendously as a result.
Dapo Okubadejo, the commissioner of finance for Ogun States on his part, proposed that the N200 billion set aside as savings should be returned to the Federation Account for distribution to the beneficiaries.
On the issue of multilateral financing, he proposed that a system should be put in place to effectively address issues associated with foreign exchange volatility.
Seek suspension of repayment plan
For Segun Orisabinone, Ondo State commissioner for finance, ‘’the level of deductions from the account for the month, which resulted in low revenue distributable to the federation and suggested that some of the deductions should be reversed.”
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Also, the Commissioner of Finance of Cross River State, Michael Odere, expressed fear that the States might not be able to fund capital projects as a result of a reduction in revenue.
He advised that given the tight financial situation of the Sub-nationals, some of the proposed deductions should be suspended including repayment for multilateral loans. He added that “whenever the total distributable revenue was low, a pre-FAAC meeting should be arranged with stakeholders to discuss ways to manage the situation.”
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In his response, Wale Edun, the minister of finance and chairman of the committee disclosed that issues relating to the foreign exchange, interest rates and all aspects of the economy were being discussed at the National Economic Council (NEC).
He therefore advised members to forward their concerns to NEC through their chief executives for consideration, stressing the need for effective collaboration between the monetary and fiscal authorities to achieve the common goal of national development.
