House to Assess Implications of FX Fluctuations on 2024 Budget

Juliet Akoje in Abuja

The House of Representatives yesterday mandated its Committees on National Planning and Economic Development as well as Appropriation and Finance to carry out a comprehensive assessment of the implications of the foreign exchange on the 2024 appropriation act.
It is also to determine the method of alignment of the current foreign exchange with the approved national budget.
The House has also resolved to evaluate the prevailing exchange rates to understand the value of the foreign exchange in the local currency and how fluctuations impact the purchasing power.

It is also to look at the overall 2024 budgetary effectiveness and to further 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.

Consequently, the House has resolved to review the outlined government spending plans across different sectors, adjust where necessary to ensure the budget remains realistic and achievable and report back within 6 weeks, for further legislative actions.
The resolutions followed the adoption of a motion of urgent public importance on the need to evaluate the implications of the current exchange rates on the 2024 national budget by Hon. Kafilat Ogbara.

Ogbara noted that the initial proposal of the federal government on the 2024 budget FX rate was based on N750 per dollar, while the National Assembly increased it to N800 in order to avoid unforeseen events due to global dynamics.
She also noted a causal relationship between the exchange rate movements and macroeconomic aggregates such as inflation, fiscal deficits and economic growth.

“When exchange rates change, the prices of imported goods will change in value, including domestic products that rely on imported parts and raw materials. Exchange rates also impact investment performance, interest rates, and inflation—and can even extend to influence the job market and real estate sector,” she said.

She further expressed concern about the major snag that stemmed from the distortionary impact of the foreign exchange regime, adding that the 2024 Appropriation Act would be difficult to implement due to foreign exchange volatility.

According to her, the situation has already caused major wide variances in personnel cost, recurrent expenditures and capital costs appropriated to the various Ministries, Departments and Agencies (MDAs).

“Cognisant of the market fluctuations, it becomes imperative for the National Assembly to review all the items that make up the 2024 Appropriation Act,” she added.