A review of the 2024 projected budget has been requested by the House of Representatives due to the sharp decline in the value of the naira in recent months.
On Thursday, after adjourning from plenary, the parliamentarians approved a resolution on an urgent public concern that was titled “Need to evaluate the implications of the current exchange rates on the 2024 national budget implementation to ensure a balanced budget and increase in the standard of living of Nigerians.”
The All Progressives Congress member Kafilat Ogbara, who represents Kosofe Federal Constituency in Lagos State, moved the motion, alerting the House to the naira’s unstable exchange rate against the dollar since the National Assembly passed and President Bola Tinubu subsequently ratified the N28.7 trillion 2024 budget.
In his motion, Ogbara who also serves as the chairman of the House Committee on Women Affairs and Social Development stated that the Federal Government’s initial budget estimate for 2024, which was predicated on a projected N800 to the dollar, was no longer viable.
Even if the value of the naira has increased recently, according to reports, on Thursday it traded for N1,488 to $1 on the official market.
The lawmaker explained to his colleagues that there is a causal relationship between macroeconomic aggregates like inflation, fiscal deficits, and economic growth and that “major economic variables like inflation, GDP, and the fiscal deficit in Nigeria, presently, are trending with the persistent fluctuation of the exchange rate.”
She emphasized that “Exchange rates also impact investment performance, interest rates, and inflation and can even extend to influence the job market and real estate sector.”
She also said that when exchange rates fluctuate, the prices of imported goods will change, including domestic products that rely on imported parts and raw materials.
She further said, “The House is worried that the weighted Average Rate Nigerian Foreign Exchange Market hovers an average of $1 at N1, 488. 90, Pound at N1, 880. 1779, Euro at NI, 609. 35 and Swiss Franc at N1, 691.35 respectively.
“The House is worried that with the distortionary impact of the foreign exchange regime, the 2024 Appropriation Act would be difficult to implement due to foreign exchange volatility. Definitely, the exchange rates have already caused a major wide variance in personnel cost, recurrent expenditures and capital costs appropriated to the various Ministries, Departments and Agencies.”
Given these market fluctuations, Ogbara said it was incumbent on the National Assembly to review (amendments to) all the items that make up the 2024 Appropriation Act, Medium Term Expenditure Framework/Fiscal Strategy Paper, external borrowing plan, foreign exchange market, and role of bureaucracy in budget implementation.
Following the adoption of the motion, the House mandated its Committees on National Planning and Economic Development, Appropriation and Finance to “Carry out a comprehensive assessment of the implications of the foreign exchange on the 2024 appropriation act and determine the method of alignment of the current foreign exchange with the approved national budget.
Other mandates of the committees are to “Examine the expected revenue the government anticipates from various sources, including taxes and other income streams and how these can help to gauge the financial resources available to meet budgetary demands; as well as “Review the outlined government spending plans across different sectors, adjust where necessary to ensure the budget remains realistic and achievable within the economic context considering priorities and essential areas.”
The committees have six weeks to report back to the House for further legislative actions.
