President Bola Ahmed Tinubu has approved the establishment of an Infrastructure Support Fund (ISF) for the 36 states.
It is part of measures to cushion the effects of the petrol subsidy removal, according to Presidential spokesman Dele Alake.
He said this was made known during yesterday’s meeting of the Federation Account Allocation Committee (FAAC) in Abuja.
Alake’s statement further explained that the FAAC would be distributing N907 billion among the three tiers of government for June, out of the N1.9 trillion revenue.
“The new Infrastructure Fund will enable the States to intervene and invest in the critical areas of transportation, including farm-to-market road improvements; agriculture, encompassing livestock and ranching solutions; health, with a focus on basic healthcare; education, especially basic education; power and water resources, that will improve economic competitiveness, create jobs and deliver economic prosperity for Nigerians.
“The committee also resolved to save a portion of the monthly distributable proceeds to minimise the impact of the increased revenues occasioned by the subsidy removal and exchange rate unification on money supply, as well as inflation and the exchange rate.
“The Committee commended President Tinubu for the bold decision to remove the petrol subsidy, and even more importantly, for providing necessary support to the States cushion the effects of the subsidy removal on Nigerians.”
During the FAAC meeting, there were intense negotiations between the Federal Government team and the governors before an agreement was reached on the amount to be shared.
The governors approved the Federal Government’s request not to share the entire N1.9 trillion realised in June.
The decision to save a larger portion was further ratified at the NEC meeting shortly before the commencement of the FAAC meeting
This is the first time the governors are pushing to save revenue that will accrue directly to the federation account.
In the past, attempts to save excess revenue had been met with staunch resistance from the governorsInstead, both the federal and the state governments have agreed to keep the N1 trillion extra with the Central Bank of Nigeria (CBN) to shore up the foreign reserve and in turn, defend the Naira from further decline.