On November 26, multiple news reports quoted the Senate President, Dr. Ahmad Lawan saying the immediate past administration under Dr. Goodluck Jonathan left an empty treasury for President Muhammadu Buhari.
According to the reports, Lawan said: “Though we inherited an empty treasury, the price of crude went down so badly, yet the little resources we started with provided lots of infrastructure and services to this country.”
N-VA’s check on the authenticity of the claim that President Muhammadu Buhari’s All Progressive Congress (APC) administration met an empty treasury after the May 29, 2015 handover from People’s Democratic Party’s (PDP) Dr. Goodluck Jonathan administration took us on a fiscal check of Nigeria’s revenue and reserve account in 2015.
Federation Account is the government’s pool of revenue which will subsequently be distributed between the three tiers of government using an agreed distribution formula. Under the current revenue sharing formula in Nigeria, the federal government takes 52.68 percent, the states 26.72 percent, and the local governments, 20.60 percent with 13 percent derivation revenue going to the oil-producing states.
According to the Central Bank of Nigeria’s (CBN) Economic Report of May 2015, the country’s federally-collected revenue (gross) was estimated at N473.86 billion, at the time.
Oil receipts (gross) were estimated at N267.18 billion, 56.4 per cent of total revenue, while non-oil receipts (gross) were estimated at N206.68 billion, accounting for 43.6 per cent of the total revenue.
The total allocation to the three tiers of government from the Federation Account and VAT Pool Account in May amounted to N377.17 billion. N173.43 billion was disbursed to the Federal government, N135.18 billion to the state government, and N81.36 billion to the local government.
While the Federal Government’s estimated retained revenue in May 2015 was N173.43 billion, the total estimated expenditure was N178.81 billion and the fiscal operations of the Federal Government resulted in an estimated deficit of N5.38 billion.
Foreign Reserves are the foreign currency that a government or its central bank holds in reserve as backup funds if their national currency rapidly devalues. This includes banknotes, deposits, bonds, treasury bills, and other government securities.
According to the CBN, Nigeria’s foreign reserves hit $36.3 billion in October 2014, fell to $32.4 billion in January 2015, and stood at $28.6 billion by May 2015. But, as of May 28, the reserve grossed at $29.60 billion while $28.72 billion was liquid and $875.64 million was blocked.
Excess Crude Account (ECA)
ECA is the Nigerian government account that is used to save and invest the country’s excess revenues generated from the sale of oil. It was created by President Olusegun Obasanjo’s administration in 2004.
In June 2007, the ECA had $9.43 billion in its account, it increased to $22 billion before the end of 2008. Under the Jonathan administration, the ECA depleted $4 billion as a result of the president’s heeding the demand of the Governors to make it a source of revenue for the Federation Account Allocation Committee (FAAC).
A short story of Excess Crude Account BALANCE
June 2007: $9.43b
Jan. 2009: $20b
Jan. 2011: $4.56b
Dec. 2012: $8.65b
Nov. 2013: $4.3b
Dec. 2014: $2.45b
May 2015: $2.07b
April 2016: $2.26b
Dec. 2018: $631m
Oct. 2019: $324m
$107bn was withdrawn from ECA from Jan. 2004 to Apr. 2018
— BudgIT Nigeria (@BudgITng) October 30, 2019
The Ministry of Finance declared in May 2015 that the actual balance in the ECA as of December 2014 was $2,060,554,241.
Did Buhari meet an empty treasury?
About forty days after Buhari assumed office, he approved an N713.7 billion ($3.5 billion) relief fund, popularly referred to as a ‘bailout’ to bankrupt Nigerian states.
Of the total sum, N413.7 billion ($2.1 billion)—sourced from LNG sales proceeds—was a special intervention fund, made available to pay outstanding wage commitments. The remaining N300 billion ($1.4 billion) was a soft loan to states, provided by the CBN.
The CBN would not have been able to give out the loan if the treasury was truly empty.
Also, the total amount in foreign reserves and ECA is pegged at over $30 billion with additional monthly revenue coming in VAT and other taxes, oil receipts, non-oil receipts, NNPC, and other federal agencies.
The claim made by the Senate President, Ahmed Lawan that President Muhammadu Buhari met an empty treasury is FALSE.
Data obtained from the CBN showed that the Federation Account as of May generated ₦473.86 billion but spent only ₦377.17 billion, leaving a surplus of ₦96.69 billion. The Foreign Reserve account had a liquid reserve of $28.72 billion as of May 28. And the ECA had a balance of $2.061 billion as of May 2015.