How poor naira lowers real value of Nigeria’s budgets – Report

Godwin Emefiele, Governor of Central Bank of Nigeria (CBN)
Godwin Emefiele, Governor of Central Bank of Nigeria (CBN)

Contrary to the claim that Nigeria’s 2020 budget is the largest since the return of democratic rule in 1999, that of 2013 was actually the largest when adjusted using the average official and parallel exchange rates of the naira to the dollar within the period.

Analysts at Lagos-based research firm, SBM Intelligence, in a report released last week put the value of the country’s N10.8 trillion 2020 budget at $28 billion and $23.4 billion in terms of value of the budget, using the official and the parallel exchange rates respectively.

The current official exchange rate of the naira to the dollar is N361/$1 while the rate at the parallel market is about N430.5/$1.

The analysts stated that in real value, the budget falls short of the N10.33 trillion 2019 budget which they said is worth $33.6 billion and $28.7 billion when adjusted to the exchange rates of the naira to the dollar at the time, which was N306.8/$1 and N359.8/$1 respectively.

Nigeria’s largest budget

Using the same analysis, the firm stated that Nigeria’s largest budget in terms of its real value since 1999 was the N4.99 trillion 2013. According to the report, the 2013 was worth $31.5 billion adjusted by the official exchange rate of N158/$1 and $30.6 billion adjusted by the parallel exchange rate of N163/$1.

“At various times, Nigeria’s budgets have been feted as ‘the highest ever’. However, for some years we have been asking if such appellations are true. Nigeria maintains a peg for converting the naira to the dollar, which in relative terms represents true value. Starting from 1999, the date where budgets became easily accessible by law, we have compared the budget announced each year to its value in US dollars at the average rate of the year in which the budget was announced,” the report explained.

The steady fall of the value of the naira means degeneration of the spending power of Nigerians families and companies, which increasingly rely on imported foreign goods and services.

High inflation and the uncertainty engendered by the duality of the exchange rate means the country’s economy will continue to flounder, experts say. The weak value of the naira also means that the government will have to spend more in repaying its dollar-backed loans.

Economists have argued that a unified exchange rate will help roll back the corrosion of the value of the naira. Vice President Yemi Osinbajo-led Economic Sustainability Committee (ESC) has proposed a unified exchange rate to maximise foreign exchange inflow.



Coronavirus factsheet


Advertisement

PT Mag Campaign AD

All rights reserved. This material and any other material on this platform may not be reproduced, published, broadcast, written or distributed in full or in part, without written permission from PREMIUM TIMES.


Support PREMIUM TIMES' journalism of integrity and credibility

Good journalism costs a lot of money. Yet only good journalism can ensure the possibility of a good society, an accountable democracy, and a transparent government.

For continued free access to the best investigative journalism in the country we ask you to consider making a modest support to this noble endeavour.

By contributing to PREMIUM TIMES, you are helping to sustain a journalism of relevance and ensuring it remains free and available to all.

Donate


TEXT AD: To advertise here . Call Willie +2347088095401...



BE THE FIRST TO KNOW! Subscribe to our newsletter

* indicates required

DOWNLOAD THE PREMIUM TIMES MOBILE APP

Now available on

  Premium Times Android mobile applicationPremium Times iOS mobile applicationPremium Times blackberry mobile applicationPremium Times windows mobile application