Reps demand 2024 budget review over forex crisis

The House of Representatives has called for a review of the 2024 budget projections owing to the free fall of the naira in the past few months.

Rising from plenary session on Thursday, the lawmakers adopted a motion on matter of public urgent importance titled, “Need to evaluate the implications of the current exchange rates on the 2024 national budget implementation to ensure a balanced budget and increase in the standard of living of Nigerians.”

The motion, moved by member of the All Progressives Congress representing Kosofe Federal Constituency, Lagos State, Kafilat Ogbara, drew the attention of the House to the fluctuating exchange rate of the naira to the dollar since the passage of the N28.7trn 2024 budget by the National Assembly and the subsequent assent by President Bola Tinubu.

Moving the motion, Ogbara who doubles as the House Committee Chairman on Women Affairs and Social Development, noted that the initial proposal of the Federal Government on the 2024 budget based on a projected N800 to the dollar was no longer fissile.

The According reports that though the naira has witnessed improvement in value in the past few days, it exchanged for N1,488 to $1 in the official market on Thursday.

The lawmaker told his colleagues that there is a causal relationship between the exchange rate movements and macroeconomic aggregates such as inflation, fiscal deficits and economic growth, adding that “The persistent fluctuation of the exchange rate trended with major economic variables such as inflation, Gross Domestic Product and fiscal deficit in Nigeria, presently.”

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

She further said, “The House is worried that the weighted Average Rate Nigerian Foreign Exchange Market hovers an average of $1 at N1, 488. 90, Pound at N1, 880. 1779, Euro at NI, 609. 35 and Swiss Franc at N1, 691.35 respectively.

“The House is worried that with the distortionary impact of the foreign exchange regime, the 2024 Appropriation Act would be difficult to implement due to foreign exchange volatility. Definitely, the exchange rates have already caused a major wide variance in personnel cost, recurrent expenditures and capital costs appropriated to the various Ministries, Departments and Agencies.”

Given these market fluctuations, Ogbara said it was incumbent on the National Assembly to review (amendments to) all the items that make up the 2024 Appropriation Act, Medium Term Expenditure Framework/Fiscal Strategy Paper, external borrowing plan, foreign exchange  market, and role of bureaucracy in budget implementation.

Following the adoption of the motion, the House mandated its Committees on National Planning and Economic Development, Appropriation and Finance to “Carry out a comprehensive assessment of the implications of the foreign exchange on the 2024 appropriation act and determine the method of alignment of the current foreign exchange with the approved national budget.

It also tasked the committees 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 and overall 2024 budgetary effectiveness.”

Other mandates of the committees are to “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; as well as “Review the outlined government spending plans across different sectors, adjust where necessary to ensure the budget remains realistic and achievable within the economic context considering priorities and essential areas.”

The committees have six weeks to report back to the House for further legislative actions.