In a press briefing on Thursday, the Federal Government of Nigeria disclosed its decision to set the exchange rate at N800 to the dollar in the 2024 Appropriation Act, emphasizing the need for stability amid uncertainties.
Minister of Budget and National Planning, Atiku Bagudu, explained that the government avoided using a spot rate to account for potential fluctuations and unforeseen events.
Bagudu clarified that the initial projection was a N750 to the dollar exchange rate in the 2024 budget, a figure later adjusted by the National Assembly to N800.
He highlighted the pragmatic approach of not relying on spot prices for budgeting purposes, citing the volatility in oil prices and foreign exchange rates.
The minister acknowledged the respect for democratic processes, noting that despite the National Assembly’s decision to raise the rate, there was a recognition of institutional authority.
He mentioned that the current rate, though higher than initially proposed, is still lower than the market bids in the deregulated market.
Addressing concerns about borrowing, Bagudu emphasized a significant decrease in the borrowing quantum for the 2024 budget compared to the previous year. He revealed that while the 2023 budget anticipated borrowing close to N14 trillion, the 2024 budget stands at N9.1 trillion, resulting in a lower percentage of GDP borrowing at 3.8%.
Furthermore, Bagudu assured that the Federal Government would strictly adhere to the dictates of the fiscal responsibility law. He highlighted the law’s provision for the Central Bank of Nigeria to lend to the government through its Ways and Means window, capped at 5% of the total budget. The minister emphasized the government’s commitment to staying within legal limits and exploring cost-effective borrowing options outside the central bank.
In conclusion, Bagudu expressed optimism that the government’s current measures would lead to a significant increase in the supply of foreign exchange in the Nigerian economy, reinforcing the commitment to fiscal responsibility in the coming year.
