In response to the ongoing depreciation of the national currency, the naira, against major world currencies, the House of Representatives declared the 2024 Appropriation Act unrealistic.
They emphasized the urgent necessity to reassess the Medium-Term Expenditure Framework/Fiscal Strategy Paper (MTEF/FSP), external borrowing plans, and the foreign exchange (FX) market.
The House aims to authorize the President to initiate new borrowing strategies to facilitate external borrowing for specific purposes. This move comes amidst growing concerns about the stability of the naira and its impact on the nation’s fiscal plans.
“It has become imperative to review all the components of the 2024 Appropriation Act, MTEF/FSP, External Borrowing Plan, FX market, and the bureaucratic role in budget implementation,” stated the House.
After deliberation, the House resolved to scrutinize prevailing exchange rates to assess the value of foreign exchange in local currency and its implications for the 2024 budget. Additionally, they plan to evaluate government revenue projections from various sources, including taxes, to gauge financial resources available for budgetary requirements.
Consequently, the House mandated the Committees on National Planning and Economic Development, Appropriation, and Finance to conduct the review and submit a report within six weeks for further legislative action.
The joint Committee is tasked with conducting a comprehensive assessment of the FX implications on the 2024 appropriation act and determining methods to align the current foreign exchange rates in the budget.
This decision followed the adoption of a motion by Hon. Khalifat Ogbara, highlighting the need to evaluate the impact of the current exchange rate on the implementation of the 2024 budget.
Ogbara explained that despite the 2024 budget being based on an exchange rate of N800 per dollar, the current rate averages at N1,488.896 to one US Dollar, with similar disparities for other major currencies.
She emphasized the causal relationship between exchange rate fluctuations and macroeconomic indicators such as inflation, fiscal deficits, and economic growth. These fluctuations affect the prices of imported goods and domestic products reliant on imports, as well as investment performance, interest rates, and inflation.
Furthermore, Ogbara highlighted the challenges posed by foreign exchange volatility, making the implementation of the 2024 Appropriation Act arduous, particularly in personnel costs, recurrent expenditures, and capital costs allocated to various government bodies.
