FAAC Disburses N22.4trn to FG, States, Local Govts. in 2025
Federal Account Allocation Committee (FAAC)disbursed N22.44 trillion among the three tiers of governments in 2025, a significant year-on-year push up from the previous record.
Allocations to the Federal Government, State Governments, and Local Governments rose strongly year on year, with increases of 55.73%, 42.21%, and 43.09% respectively, according to data from the Office of the Accountant General of the Federation.
The year-on-year surge, boosted by petrol, subsidy removal and increased federally generated revenue collection marked a substantial expansion in public sector liquidity and fiscal capacity.
In its review, investment firm Cowry Asset Limited said FAAC inflows grew by 44.26%, while 13% derivation payments increased at a more moderate pace of 14.15%, indicating that the broader revenue gains were not driven solely by oil-producing allocations.
The expansion in FAAC allocations improved liquidity conditions across all tiers of government, providing support for public spending, salary payments, and infrastructure outlays.
At the same time, stronger inflows can encourage growth in recurrent expenditure, reinforcing the need for disciplined fiscal management and a sustained focus on capital efficiency.
Monthly disbursements showed a generally upward trend through most of the year, climbing from N1.70 trillion in January to a peak of N2.23 trillion in August before easing slightly toward year-end.
The second half of the year was particularly supportive, reflecting stronger statutory inflows and resilient tax collections. The August peak was largely linked to elevated statutory revenues alongside stable VAT receipts, suggesting firmer fiscal momentum during that period.
By revenue source, the Statutory Account remained the dominant contributor, totaling N13.22 trillion in 2025, a sharp 141.8% increase from the prior year.
This reflects stronger federally collected revenues, supported by improved oil earnings, exchange rate adjustments, and better non-oil revenue performance.
In contrast, exchange gains declined significantly to N699 billion, down 88.4% year on year, indicating a normalization from the unusually large currency-related windfalls recorded in 2024.
Non-oil revenue streams continued to gain traction. VAT collections rose to N7.97 trillion, up 30.6% year on year, supported by improved consumption activity and ongoing enhancements in tax administration.
EMTL receipts remained broadly stable at N452 billion, underscoring consistent contributions from telecom-related activity. The steady growth in VAT and other domestic taxes points to gradual progress in diversifying revenue sources away from volatile exchange-related gains.
“We think the improved FAAC disbursements in 2025 reflected strong fiscal inflows, improved tax performance, and reduced dependence on exchange rate windfalls.
“Sustaining this trajectory will depend on continued structural reforms, stable energy revenues, and careful expenditure management as fiscal authorities navigate an evolving domestic and global environment”, Cowry Asset Limited stated.
The investment firm added that in the coming months, government revenues are expected to strengthen further, supported by the mandatory fiscalisation of tax processes, the continued rollout of digital revenue administration systems, and efforts to broaden the tax base.
Analysts said these measures should enhance compliance, reduce leakages, and improve transparency over time. However, fiscal risks remain elevated. The large budget deficit, estimated at around N25.3 trillion, continues to pose challenges for borrowing requirements and debt sustainability.
In addition, geopolitical tensions and potential supply disruptions in global energy markets present upside risks to crude oil prices. While higher oil prices could temporarily bolster FAAC inflows, associated volatility highlights the importance of accelerating non-oil revenue reforms and maintaining prudent fiscal policy. #FAAC Disburses N22.4trn to FG, States, Local Govts. in 2025#
