FAAC warns FG, states against reckless spending as new oil order, tax reforms boost allocation
The Minister of State for Finance and Chairman of the Federation Account Allocation Committee (FAAC), Dr Doris Uzoka-Anite, has urged the three tiers of government to exercise fiscal discipline in managing anticipated increases in federation revenues arising from recent reforms.
Dr Uzoka-Anite gave the advice at a meeting of the Federation Account Allocation Committee, against the backdrop of the newly signed Presidential Executive Order to Safeguard Federation Oil and Gas Revenues and Provide Regulatory Clarity 2026, as well as the implementation of new tax laws.
She said the reforms were expected to result in higher monthly gross inflows into the Federation Account, increased allocations to the Federal, State and Local Governments, and higher derivation transfers to oil-producing states.
According to her, a retrospective audit of relevant funds may also yield one-off recoveries that could provide an additional fiscal boost to the federation.
However, the minister cautioned that sudden liquidity injections, if not carefully managed, could trigger inflationary pressures, exchange rate volatility and excess aggregate demand in the economy.
She warned that treating higher allocations as permanent windfalls could undermine macroeconomic stability and long-term fiscal sustainability.
Dr Uzoka-Anite proposed phased disbursement of any one-off recoveries, strengthening of the Excess Crude and Stabilisation Buffer mechanism, and closer coordination with the Central Bank of Nigeria to manage liquidity conditions.
She also called on all benefiting governments to prioritise capital expenditure over recurrent spending to drive growth and development.
The FAAC chairman urged the Federal, State and Local Governments to channel incremental revenues towards reducing debt burdens, clearing salary and contractor arrears, building fiscal buffers and investing in growth-enhancing sectors of the economy.
She emphasised that prudent management of the anticipated revenue gains would be critical to sustaining economic stability and ensuring that the benefits of the reforms translate into long-term national development.
