The Nigerian government has expressed optimism that with the measures currently put in place, the nation will soon experience significant increase in the supply of foreign exchange into the economy.
Speaking on 2024 Budget and reasons the government settled for N800 to dollar exchange rate, the Minister of Budget and National Planning , Atiku Bagudu told State House Correspondents that the Federal government deployed a conscious strategy to avoid eventualities and uncertainties.
Bagudu also explained that the government projected exchange rate of N750 to the dollar in the 2024 budget following the increase of N800 made by the National Assembly .
“For budgeting purposes. You don’t use spot rate of anything. Oil price can go to 120 today, maybe there is a shortage., maybe there is a collision between two ships that will block a channel. It would be foolish to use that as a reference price, I should take a period maybe six months to one year and say let me observe this average behaviour, so you don’t use spot prices. So even with exchange rate is like that,” the Minister noted.
He explained that “as much as we are hoping that it would soon come below, but at the time you are doing the budget you will take a view on average performance. And that’s what we took.”
“In fact we took an average performance of 750 on the executive side and we proposed it to the National Assembly and the National Assembly in its wisdom, and mind you this is democracy, and President Tinubu is one who is a lifelong advocate of institutional separation of power.
“So, he respected democracy that even though it was higher than what he submitted, but the institution that says so, has the authority to say so and even at the time they say 100, because it’s not an official rate it’s tidal, because with the deregulated market, you no longer have an official rate, it is much lower than even the way the markets are bidding.,” the minister said.
Bagudu affirmed that the Federal government on the 2024 fiscal year, intends to operate strictly within the dictates of fiscal responsibility law, which provides for the Central Bank of Nigeria (CBN), to lend to the government through its Ways and Means window.
He added that the borrowing rate to fund the deficit in the 2024 budget will be significantly low compared to the funding of 2023 budget.
“In 2023, the budget anticipated a borrowing of close to N14 trillion. This year’s budget is N9.1trillion. So we think that is significant. Because it’s 2023 took us to about 6.11% of our GDP as borrowing. This one is 3.8%. So the quantum had decreased.
“We will not go outside the law and borrow from ways and means, what is outside the law. So the fiscal responsibility law says, in every one year, the central bank can lend the government up to 5% of its budget for the year. So if you go out of that, you’re going outside the lawful limit, and that’s what the minister of Finance and Coordinating Minister of the Economy was very clear we are not going to do. We are not going to resort to borrowing outside the law.
“And secondly, as much as possible, we will even borrow away from the central bank because sometimes it’s even cheaper to borrow. So, those are the two elements. So the quantum has decreased, then we will go by the book.
“The President, in his steadfastness has brought a central bank governor who will not even allow and will also determined coordinating minister and I so that’s combination of two.
“And then three, our revenue projections are designed to ensure that everyone earns his job. This is a country that had ones produce more than 2 million barrels a day. So why are we behaving as if we can’t achieve that again? So the first thing is to task people and ensure that people begin to run around to earn their job the President said as much. So that’s the basis of confidence and optimism, that combination of those measures on the borrowing and then the emphasis that we must collect,” he said.
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