Federal Government Strategically Avoids Spot Rate in 2024 Budget, Sets Naira Exchange Rate at N750"

"Federal Government Strategically Avoids Spot Rate in 2024 Budget, Sets Naira Exchange Rate at N750"

The Federal Government has outlined its conscious and strategic decision to avoid using a spot rate for the foreign exchange benchmark in the 2024 budget, aiming to mitigate potential uncertainties. Atiku Bagudu, the Minister of Budget and National Planning, emphasized the government's meticulous consideration of the naira's average performance before projecting an exchange rate of N750 to the dollar in the budget, later adjusted to N800 by the National Assembly.

Bagudu explained the rationale behind not using spot rates for budgeting, citing the unpredictability of factors such as oil prices and external events. Instead, the government opted for a cautious approach, observing the naira's average behavior over six months to one year.

He clarified that the proposed average performance of $750 was presented to the National Assembly, which, in its democratic wisdom, increased the exchange rate to N800. Bagudu highlighted President Tinubu's respect for democracy and institutional separation of powers, acknowledging the authority of the National Assembly in determining the exchange rate.

The minister expressed optimism that with current measures, there would be a substantial increase in foreign exchange supply to the economy. Addressing concerns about borrowing, Bagudu emphasized a significant reduction in the quantum of borrowing compared to the 2023 budget. The 2024 budget aims to adhere strictly to the fiscal responsibility law, limiting Central Bank lending to the government through its Ways and Means window to five percent of the total budget.

Bagudu underscored the government's commitment to staying within legal limits and exploring cost-effective borrowing options outside the central bank. He concluded by emphasizing the need to encourage economic activities to restore the country's oil production to previous levels, fostering confidence and optimism.

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