The Governor of the Central Bank of Nigeria, Olayemi Cardoso has explained that monthly revenue releases by the Federal Account Allocation Committee, FAAC are impacting Nigeria’s foreign exchange pressures.
Cardoso disclosed this in his remarks after the CBN 297th Monetary Policy Committee meeting on Tuesday.
He raised alarm over the growing level of fiscal deficit in the country.
The apex bank Boss 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 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, 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.
Naira: Why FAAC releases worsen FX pressures – CBN Governor, Cardoso
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