THE Federation Account Allocation Committee, FAAC, has distributed N704.27 billion to the three tiers of government for the month of July. This is 2.2 per cent lower than what was shared out the previous month, the Accountant General of the Federation, Ibrahim Dankwambo, said weekend.
“The total revenue distributable for July including VAT is N704.273 billion,” Dankwambo told reporters after a meeting of the FAAC responsible for the disbursal.
The monthly distributions have a major impact on liquidity in Nigeria and can trigger shifts in bond yields and interbank rates.
N704 billion in revenues and windfall oil savings to government for the month of July, a massive disbursal which is likely to trigger a drop in bond yields and interbank rates next week, dealers said. Nigeria shares its revenues among three tiers of government each month — federal, state and local — and tops the disbursal up with a withdrawal from its windfall oil savings if there is a shortfall.
Dankwambo said Nigeria had distributed N704.27 billion in revenues and $2 billion from its crude oil savings for last month, making up one of the largest monthly disbursal ever.
Around 80 per cent of the liquidity in the country comes from public cash flows and the monthly allocations can trigger significant shifts in bond yields and interbank rates.
“We expect interbank rates to crash immediately as part of monthly budgetary allocations to state and local governments hit the system, latest by tomorrow (Tuesday),” one money market dealer said.
The disbursal comes five months before presidential and parliamentary elections. Government spending has traditionally risen in election years, leading analysts to question the quality of the expenditure.
Major recipients
Among the major recipients of the monthly revenue distributions are the country’s 36 states, whose governors form a powerful caucus within the ruling People’s Democratic Party, PDP, and who will be key to the outcome of the polls.

http://www.vanguardngr.com/2010/08/15/faac-disburses-n704bn-to-3-tiers-of-govt/