The Federal Government has given reasons it pegged the exchange rate of the naira at N800 to a dollar in the 2024 Appropriation Act, saying it avoided basing the foreign exchange benchmark in the 2024 budget on a spot rate, to avoid eventualities and uncertainties.
The Minister of Budget and National Planning, Atiku Bagudu, who spoke with State House correspondents, explained that the FG had earlier projected exchange rate of N750 to the dollar in the 2024 budget but the National Assembly raised to N800 to the dollar.
“For budgeting purposes, you don’t use the spot rate of anything. Oil prices can go to 120 today, maybe there is a shortage, or maybe there is a collision between two ships that will block a channel,” the Minister said.
“It would be foolish to use that as a reference price, I should take a period maybe six months to one year and say let me observe this average behaviour, so you don’t use spot prices. So even with the exchange rate, it is like that.
“Much as we are hoping that it would soon come below, but at the time you are doing the budget, you will take a view on average performance. And that’s what we took.
“We took an average performance of N750 on the executive side and we proposed it to the National Assembly.”
Bagudu added that President BolaTinubu accepted the National Assembly’s decision to raise the rate further because of his respect for institutions and democracy.
The former Kebbi State Governor said: “So, he respected democracy that even though it was higher than what he submitted, but the institution that says so has the authority to say so and even at the time they say 100 because it’s not an official rate it’s tidal because, with the deregulated market, you no longer have an official rate, it is much lower than even the way the markets are bidding.”
