The Central Bank of Nigeria (CBN) has explained that monthly revenue releases by the Federal Account Allocation Committee (FAAC) are impacting Nigeria’s foreign exchange pressures.
The Governor of CBN, Olayemi Cardoso made this disclosure in his remarks after the CBN 297th Monetary Policy Committee meeting held on Tuesday, 24 September, 2024.
The Apex Bank boss, who raised alarm over the growing level of fiscal deficit in the country, added that members of MPC have observed a strong correlation between FAAC and the Liquidity level in the banking system and exchange rates.
“Members were also concerned about the growing level of fiscal deficit but acknowledged the efforts of the fiscal authorities not to resort to Ways and Means financing. Furthermore, members observed a strong correlation between FAAC releases and liquidity levels in the banking system as well as its impacts on the exchange rates.”
Reacting to Cardoso’s comment, Kalu Aja, a financial analyst through his X account on Wednesday, 25 September, 2024 alleged that the recipients of FAAC allocation convert the revenue paid in Naira into Dollars at the black market thereby impacting Nigeria’s exchange rates negatively.
“Recipients of FAAC are converting Naira FAAC allocation to $ on the black market”, he said.
The development comes as Naira depreciated significantly against the dollar on Tuesday, 23 September, 2024 exchanged at N1658.48 and N1675 at the official and black market.
In August 2024, the Federal, state and local governments shared N1.203 trillion from FAAC allocation.
