Why stabilisation Fund, Excess Crude Account suffered 20% decline in 2016

More facts have emerged on why the Stabilisation Fund Account (SFA) and Excess Crude Account (ECA) of Nigeria have been in the decline between 2015 and 2016, losing about 20 per cent each.

While SFA in 2014 stood at about N35.6 bn, it has come to about N25.8 billion as at 2017, the ECA also came down from $18.5 bn to about $13.2 bn

The Minister of Finance, Mrs. Kemi Adeosun, had while briefing the National Economic Council, presided over by the Vice President, Yemi Osinbajo, on Thursday, confirmed that both the stabilisation fund and the excess crude accounts were in decline from what their figures were three years ago, but refused to give details.

However, Ripples Nigeria’s investigation has revealed that part of the reasons for the reported reduction in volume of both funds was that the bailout funds, which the Presidency approved for states in April 2016 was drawn partly from SFA and the ECA.

Both accounts are under the control of Mobilisation Allocation and Fiscal Commission (RMAFC), which was authorised to disburse the funds to the needy states.

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A top ministerial official, who pleaded for anonymity said that a special arrangement was made within the RMAFC that the bailout funds to the states should be deducted at source by the Federal Allocation Account Commission.

The source said: “Failure of most of the states to use the funds for the purpose they were meant, which payment of salaries and pension, made it difficult for the commission to start deducting the
funds.

“The fund is meant to serve as fall-back for few number of states at a given time, unlike what happened in 2015.

“But except Lagos and Rivers states, the other 34 states went for the bailout from both stabilisation fund and ECA, all at one swoop,” he disclosed.

Adeosun in her address to the economic council said the funds were actually used for the purpose of creating them, “which is that they should save the government, especially states, from suffering absolute decline in their revenue genetation arising from factors outside their control.”

The minister also informed the council that the balance in the current ECA actual cash could not be given because a fresh Economic Council had in February authorised deduct of about $250 million for injection into the Sovereign Wealth Fund.

The SFA is created and funded yearly from a deduction equivalent of 0.5 per cent of the Federation Account, which is paid into a designated fund account.

But ECA on the other is funded from the difference between the actual price of crude oil at the international market and the price benchmarked by the National Assembly for the country’s yearly budget.

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