After evaluating the average naira performance, the Federal Government agreed for N800 to dollar exchange rate in the 2024 Appropriation Act on Thursday.
To prevent uncertainties, it did not base the 2024 budget foreign exchange benchmark on a spot rate.
Atiku Bagudu, Minister of Budget and National Planning, told State House correspondents that the FG had chosen N750 to the dollar in the 2024 budget, which the National Assembly boosted to N800.
Bagudu stated, “You don’t use spot rates for budgeting. Oil prices could reach 120 today if there is a shortage or a ship collision that blocks a passage.
“I shouldn’t use that as a reference price; I should observe this average behavior for six to twelve months. This is true even with the currency rate.”
He added, “We hope it will soon fall below, but when you do the budget, you will consider average performance. So we took that.
We presented the National Assembly with an executive performance average of N750.
The minister said Tinubu respected the National Assembly’s rate increase because he values institutions and democracy.
He respected democracy because even though it was higher than what he submitted, the institution that says so has the authority to say so, and even when 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’s much lower than even the markets’ bidding,” the minister said.
The minister said the FG is confident that its current initiatives will boost foreign exchange supply quickly.
Bagudu also noted that the 2024 budget’s deficit-funding borrowing is much higher than last year’s.
“The 2023 budget predicted N14tn in borrowing. The budget is N9.1 trillion this year. So we consider that noteworthy.
We borrowed 6.11 percent of GDP in 2023. This is 3.8%. Bagudu said the quantity has dropped.
The former Kebbi State Governor stated the FG will follow fiscal responsibility law in the new year, which allows the Central Bank of Nigeria to lend the government only 5% of the budget through its Ways and Means window.
He stated, “We will not borrow from ways and means outside the law. The fiscal responsibility statute allows the central bank to lend the government up to 5% of its budget annually.
“If you go outside that, you’re breaking the law, and the Finance Minister and Coordinating Minister of the Economy made it clear we won’t do that. We won’t borrow illegally.
Second, we will borrow from the central bank whenever possible because it’s cheaper. These are the two components. Since the quantum has dropped, we’ll follow the text.”
