The Federation Account Allocation Committee (FAAC) has shared a total of ₦2.3 trillion among the Federal Government, 36 states, and 774 local government councils as revenue generated in May 2026, despite a significant drop in Value Added Tax (VAT) collections.

According to a communiqué issued after the committee's June meeting in Abuja, the distributable revenue comprised statutory revenue, VAT proceeds, electronic money transfer levy (EMTL), exchange difference revenue, and other sources.

FAAC disclosed that gross VAT revenue fell by ₦62.95 billion, declining from ₦806.62 billion recorded in April to ₦743.67 billion in May. The reduction in VAT collections came amid concerns over slowing consumer spending and economic activity in some sectors.

Despite the drop in VAT earnings, total revenue available for distribution increased due to improved statutory revenue performance. Gross statutory revenue rose to ₦2.65 trillion in May, representing an increase of ₦273.62 billion compared to the ₦2.38 trillion generated in April.

The committee stated that a gross revenue of ₦3.39 trillion was available in May. After deductions for collection costs and transfers, interventions, and refunds, a net distributable revenue of ₦2.3 trillion was shared among the three tiers of government.

Under the approved allocation formula, the Federal Government received ₦818.68 billion, state governments received ₦759.14 billion, while local government councils shared ₦534.28 billion.

In addition, oil-producing states received ₦188.13 billion as 13 per cent derivation revenue. FAAC noted that the increase in statutory revenue helped offset the decline in VAT receipts, ensuring a higher overall allocation for the month.

The committee also reported gains in revenues from petroleum profit tax, companies income tax, and other federally collected sources. The latest distribution ranks among the highest monthly allocations recorded by FAAC, reflecting the impact of ongoing revenue reforms and improved collection efforts by government agencies.

Economic analysts, however, warned that the decline in VAT revenue could signal weakening consumer demand and may affect future allocations if the trend persists. They stressed the need for governments at all levels to strengthen internally generated revenue sources and improve fiscal discipline.

The May allocation comes as federal, state, and local governments continue to grapple with rising expenditure commitments, infrastructure funding needs, and increasing debt-servicing obligations across the country.