The Minister of State for Finance and Chairman of the Federation Account Allocation Committee (FAAC), Doris Uzoka-Anite, has called on the three tiers of government to exercise fiscal discipline in managing anticipated increases in federation account revenues, cautioning that poorly managed liquidity surges could trigger inflation and economic instability.
Speaking at a FAAC meeting, Dr. Uzoka-Anite addressed members against the backdrop of the recently signed Presidential Executive Order to Safeguard Federation Oil and Gas Revenues and Provide Regulatory Clarity 2026, alongside the implementation of new tax laws. She noted that both measures are projected to significantly increase monthly gross inflows into the Federation Account.
According to her, the reforms are expected to translate into higher allocations for the Federal, State, and Local Governments, as well as increased derivation transfers to oil-producing states. She added that a retrospective audit of relevant funds could also result in one-off recoveries, offering an additional fiscal boost.
However, the FAAC Chairman warned that sudden injections of liquidity into the economy, if not carefully managed, could heighten inflationary pressures, destabilize the exchange rate, and create excess aggregate demand.
To mitigate these risks, Dr. Uzoka-Anite proposed a phased disbursement of any one-off recoveries and called for the strengthening of the Excess Crude and Stabilisation Buffer mechanisms. She also advocated closer coordination with the Central Bank of Nigeria to manage macroeconomic stability.
Furthermore, she urged all tiers of government to prioritize capital expenditure over recurrent spending and to channel incremental revenues toward reducing public debt, clearing arrears, building fiscal buffers, and investing in growth-enhancing sectors of the economy.
Dr. Uzoka-Anite cautioned against treating the projected higher allocations as permanent windfalls, stressing the need for prudent financial management to ensure long-term economic stability and sustainable development.
Credit:NTA
