The House of Representatives on Thursday 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.
The Committees are to determine the method of alignment of the current foreign exchange with the approved national budget.
They also 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.
They were mandated 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.
The Committees will also 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 and forward report to the House within six weeks, for further legislative actions.
These resolutions followed the adoption of a motion of urgent 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” moved by Hon Kafilat Ogbara.
The House noted the initial proposal of the federal government on the 2024 budget foreign exchange rate to be based on N750 per dollar, while the National Assembly increased it to N800 in order to avoid unforeseen events due to global dynamics.
It also noted there is a causal relationship between the exchange rate movements and macroeconomic aggregates such as inflation, fiscal deficits and economic growth.
The House said, evidently, the persistent fluctuation of the exchange rate trended with major economic variables such as inflation, GDP growth, and fiscal deficit/GDP ratio in Nigeria, presently.
The House said it was aware 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.
The motion reads, “Exchange rates also impact investment performance, interest rates, and inflation and can even extend to influence the job market and real estate sector.
“The House is worried that the weighted Average Rate Nigerian Foreign Exchange Market (NFEM) hovers average of US Dollar at N1, 488. 896, Pounds Sterling at N1, 880. 1779, Euro at NI. 609. 3477and SWISS FRANK at N1, 691.3507 respectively.
“The House is also worried about the major snag thatstemmed from the distortionary impact of the foreign exchange regime, the 2024 Appropriation Actwould be difficult to implement due to foreign exchange volatility. Definitely, the exchange rateshave already caused a major wide variances in Personnel Cost, Recurrent Expenditures and Capital Costs appropriated to the various Ministries, Departments and Agencies.
“Cognizance of the market fluctuations, it becomes imperative for the National Assembly to review (amendments to) all the items that make up the 2024 Appropriation Act, MTEF/FSP, External Borrowing Plan, FX market, and role of bureaucracy in budget implementation.”