Matters arising from recent FAAC and NEC meetings -
from the National Economic Council raised some interesting policy and legal issues which appeared to have been swept under the carpet by popular media reportage. This discourse reviews some of these critical issues and their implications and challenges for economic and social life. It contains recommendations for these challenges going forward.
The first is the fact that over N1.9tn was available for sharing in the distributable pool account by the three tiers of government and only N907bn was actually shared. There was a resolution to save N790bn while the remainder will be used for statutory deductions. The minimisation of the impact of the increased revenues occasioned by subsidy removal and exchange rate unification on money supply as well as inflation and the exchange rate were given as part of the reasons for the savings.
Section 162 of the constitution provides that, “Any amount standing to the credit of the states in the Federation Account shall be distributed among the states on such terms and in such manner as may be prescribed by the National Assembly.” The only law the National Assembly has so far made for savings at this level is the ECA but the money to be saved is not the proceeds of the reference commodity price rising above the predetermined level set in the Appropriation Act.
To stand the test of legality, this new and unprecedented savings fund must be based on a clear legal and policy framework approved through the law-making powers of the National Assembly, based on agreements between the federal and state governments, showing how the funds will be managed, including its distribution, accruing interest and investment by the three tiers of government.
The second issue is about the Infrastructure Support Fund set up by pronouncement. It is stated that the ISF would enable states to intervene and invest in critical areas so as to improve economic competitiveness, create jobs and deliver economic prosperity. Again, the ISF is without a legal and policy foundation.
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