“No More N750/$:” FG Explains New Exchange Rate For 2024 Budget, Says It’s Achievable

“No More N750/$:” FG Explains New Exchange Rate For 2024 Budget, Says It’s Achievable

  • The Nigerian government has defended the exchange rate of N800 to dollar set in the 2024 budget
  • The Minister of Budget and National Planning, Atiku Bagudu, said the new rate is based on current trends
  • He explained that the previous targeted rate was N750 per dollar, which was later changed to N800 to a dollar by the National Assembly

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The Nigerian government disclosed on Thursday, January 11, 2024, that the new exchange rate benchmark in the 2024 budget was based on a spot rate meant to avoid uncertainties.

The Minister of Budget and National Planning, Atiku Bagudu, disclosed this while answering questions from State House journalists after a meeting with President Bola Tinubu.

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Naira, FG
The federal government has readjusted the exchange rate benchmark for 2024 Credit: Bloomberg/Contributor
Source: Getty Images

National Assembly raises benchmark interest rate for 2024

The Minister explained that before arriving at the project FX rate of N750 per dollar in the 2024 budget, the government considered and critically examined the average performance of the naira.

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The National Assembly later raised the benchmark exchange rate in the budget to N800 to a dollar.

Bagudu said:

“For budgeting purposes. You don’t use the spot rate of anything. Oil prices can go to 120 today; there may be a shortage or a collision between two ships that will block a channel.

According to the Minister, using a reference price that might fluctuate in the future would be unwise.

BusinessDay reports that Bagudu stated that President Tinubu honored the National Assembly in allowing it to raise the FX benchmark further, considering how much he respects institutions.

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FG to reduce external borrowing in 2024

Per the Minister, the federal government was sure that with the measures it is currently taking, there will be a significant rise in the supply of FX into the economy.

On external borrowing, the Minister said the difference between the 2024 borrowing amount and 2023 is significant.

He said the federal government intends to operate strictly within the confines of fiscal responsibility of the law, which allows the Central Bank of Nigeria (CBN) to lend it money through its Ways and Means window, which is just 5 percent of the total budget.

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Legit.ng reported that Ben Akabueze, the director-general of the federation's budget office, has said that the Naira will strengthen in value in the foreign exchange market in 2024.

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Speaking in an interview with Channels TV on Tuesday, December 26, 2023, the Budget Office DG said this will be possible as the country expects an increase in dollar supply.

He noted that the Tinubu-led government expects the reforms initiated in 2023 to start yielding results in 2024, which is why it maintains a positive stance on the exchange rate.

Source: Legit.ng

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