The Minister of Budget and National Planning, Atiku Bagudu, Thursday said that it was conscious and strategic never to base the foreign exchange benchmark in the 2024 budget on a spot rate, to avoid eventualities and uncertainties.
He stated this while speaking to State House reporters.
The minister explained that before arriving at the projected exchange rate of N750 to the dollar in the 2024 budget, which the National Assembly raised to N800 to the dollar, the government considered and viewed critically, 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, even with the exchange rate, it is like that,” he added.
Bagudu 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.”
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“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”, adding that Tinubu allowed the National Assembly to raise further the exchange rate considering his high respect for the institution 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 explained that the federal government, within 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, only 5 per cent of total budget.
He expressed optimism that the government could achieve the target of at least 1.8 million oil production per day with the current security gains and mobilisation of all stakeholders.
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