The Federal Government has outlined the reason behind choosing a N800 to dollar exchange rate in the 2024 Appropriation Act. The decision was informed by the consideration of the average performance of the naira.

The Minister of Budget and National Planning, Atiku Bagudu, emphasized the avoidance of basing the foreign exchange benchmark in the 2024 budget on a spot rate to mitigate eventualities and uncertainties. According to Bagudu, the FG had initially selected a projected exchange rate of N750 to the dollar, which was later revised to N800 to the dollar by the National Assembly.

Bagudu clarified that for budgeting purposes, spot rates are not utilized due to their susceptibility to sudden and volatile fluctuations. He highlighted the need to gauge the average behavior over a specific period, rather than relying on instantaneous values.

Addressing the increased exchange rate approved by the National Assembly, Bagudu underscored the government’s respect for democracy and institutional decisions. Despite the variance from the executive proposal, the government remained committed to adhering to the authority of the National Assembly.

Furthermore, Bagudu expressed optimism regarding the FG’s strategies to enhance the supply of foreign exchange in the economy, aiming for a significant improvement in the near future.

Discussing the borrowing aspect of the 2024 budget, Bagudu emphasized a notable disparity compared to the previous year. He stated that the anticipated borrowing for 2024 stands at N9.1 trillion, marking a substantial reduction from the N14 trillion projected for 2023. This reduction translates to a decrease in borrowing as a percentage of the GDP, reflecting a more conservative approach in the current fiscal plan.

Bagudu highlighted the government’s commitment to strictly adhere to the fiscal responsibility law, particularly in relation to borrowing through the Central Bank of Nigeria’s Ways and Means window. He affirmed the government’s resolve to refrain from exceeding the prescribed borrowing limits, ensuring compliance with legal provisions and responsible financial management.

In conclusion, the Federal Government’s decision-making process for the 2024 budget reflects a balanced approach, considering economic stability, democratic principles, and legal frameworks to guide fiscal management.