By Adedapo Adesanya
The Minister of Budget and Economic Planning, Mr Atiku Bagudu, has expressed confidence that the measures taken so far would substantially increase the supply of foreign exchange (FX) into the economy.
Speaking in Abuja on Thursday, he said that efforts to boost the country’s oil production from around 1.49 million barrels per day to 1.8 million barrels per day were underway.
He explained that the federal government would be working with the sub-national governments to tackle crude theft, which is one of many drawbacks affecting the country from getting the much-needed revenue from the resources. Oil is responsible for more than 80 per cent of all Nigeria’s FX earnings.
He said, “We have seen the reforms so far have brought in more revenue but we are not stopping there. We believe that our objective to achieve at least 1.8 million production per day is something that has been done before. And with security gains that are increasing with the mobilising of all stakeholders.
“For example, just yesterday, maybe you will have seen even the governors re-energise the National Economic Council Committee (NEC) on crude oil theft and prevention.
“So, that governors will say to the extent that is happening in their state, they will take personal responsibility and lead.
“So, because of that we are confident that the revenue projections are achievable and with budget efficiency and discipline we are putting in, we believe that we won’t have to resort to additional borrowing. Maybe we will even borrow less.”
On the decision to base the 2024 budget on a forex benchmark of N750 to a Dollar, he said it was a strategic and conscious effort by the federal government.
Mr Bagudu said before arriving at the projected exchange rate in the 2024 budget, 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 prices can go to $120 today, maybe there is a shortage, or maybe there is a collision between two ships that will block a channel. It would be foolish to use that as a reference price,” he said.
“I should take a period of maybe six months to one year and say let me observe this average behaviour, so you don’t use spot prices.
“So, even the exchange rate is like that. Much as we are hoping that it will 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,” Mr Bagudu said.
The Minister had provided the premise after saying the federal government in the 2024 fiscal year intends to operate strictly within the dictates of fiscal responsibility law.
The law provides that the Central Bank of Nigeria (CBN) can lend to the government through its Ways and Means window only 5 per cent of the total budget.
“We will not go outside the law and borrow from ways and means, that are outside the law. So, the fiscal responsibility law says, that every year, the central bank can lend the government up to 5 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,” he said.
