The Federal Government, yesterday, explained why it settled for N800 to a dollar benchmark in the 2024 budget, saying it was aimed at addressing uncertainties.
Speaking to State House correspondents, Minister of Budget and National Planning, Atiku Bagudu, said that before settling for the initially projected exchange rate of N750 to the dollar (later raised by the National Assembly to N800), the government thoroughly assessed and scrutinised the average performance of the naira.
“For budgeting purposes. You don’t use the 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, it is the same with the exchange rate,” the Minister said.
He explained that “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.”
The minister also said that President Bola Tinubu respected the National Assembly in allowing further raise in the exchange rate considering his high respect for institutions and democracy.
The minister noted that the Federal Government was sure that with the measures it is currently taking, there will soon be a significant increase in the supply of foreign exchange into the economy.
The Budget Minister, who also spoke on the level of borrowing to fund the deficit in the 2024 budget, said the difference between this year’s borrowing compared to 2023 remains significant.
“In 2023, the budget anticipated a borrowing of close to N14 trillion. This year’s budget is N9.1 trillion. So, we think that is significant, because 2023 took us to about 6.11 per cent of our GDP as borrowing. This year is 3.8 per cent. So, the quantum had decreased,” Bagudu added.
He further explained that the Federal Government within the 2024 fiscal year intends to operate strictly within the dictates of the fiscal responsibility law, which provides for the Central Bank of Nigeria (CBN) to lend to the government through its Ways and Means window, only five per cent of the total budget.
“We will not go outside the law and borrow from ways and means. The fiscal responsibility law says, in every one year, the CBN can lend the government up to five per cent of its budget for the year. 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.
“Also, our revenue projections are designed to ensure that everyone earns his job. This is a country that had once produced more than two million barrels a day. So why are we behaving as if we can’t achieve that again? The first thing is to task people and ensure that people begin to run around to earn their job. So that’s the basis of confidence and optimism,” Bagudu noted.
Meanwhile, President Tinubu, yesterday met with the Minister of Steel Development, Shuaibu Abubakar Audu, and the Minister of Defence, Mohammed Badaru, during which he received a briefing on investment prospects in the steel sector.
The President emphasised that a revitalised steel development industry is both a catalyst for robust economic growth and a doorway to immense opportunities for Nigeria’s massive pool of talented entrepreneurs.
“We will remain unyielding in our determination to build a Nigeria where every citizen has an equal opportunity to prosper and achieve their dreams. New investments in steel production will spur the growth of so many sectors. Industrialisation will be a reality in our country with sufficient energy and steel. Nigerian steel will undergird our economy and other economies in our region in future years. I am glad that members of my cabinet have adopted my approach to attracting new investments and job opportunities for our people. Hard work is the only true pathway. We will not relent,” the President stated.
