Senator Ali Ndume, the Chief Whip of the Senate, has asserted that the Federal Government is reaping benefits from the depreciation of the naira against the dollar,Punch reports.
Ndume made these remarks while discussing the ongoing depreciation of the naira against the dollar.
In an interview with Channels Television on Wednesday, Ndume explained that instead of suffering losses due to the naira’s decline, the Federal Government is actually accruing more revenue to finance its 2024 budget.
He pointed out that as the value of the dollar rises, the government will have more naira at its disposal for expenditures.
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Highlighting the structure of the 2024 budget unveiled in November, Ndume noted its heavy reliance on dollar-based income, particularly deriving from crude oil exports priced in dollars.
He stressed that despite the naira’s devaluation, Nigeria’s primary export, crude oil, remains in high demand globally, suggesting that the country stands to benefit from the prevailing exchange rate between the dollar and the naira.
Ndume clarified, “This budget is predominantly in dollars in terms of income, but expenditures are in naira. So, with increased dollar value, our naira expenditure gains more value because we acquire revenue in dollars while spending in naira.”
He further analyzed that although the naira’s value against the dollar has declined, the country is earning revenue predominantly in dollars, which would be valued at the prevailing exchange rate, ultimately implying potential budgetary gains for Nigeria.
The country has been grappling with a persistent shortage of foreign exchange, attributed to reduced oil production and inflows from abroad.
Data from FMDQ Securities, overseeing forex trading in Nigeria, indicates that the naira reached highs of 1,701/$ and lows of N1,100 in intraday trading before settling at N1,551/$ on Tuesday.
In June 2023, the Central Bank of Nigeria transitioned to a floating exchange rate system for the naira, unifying all forex market segments, resulting in a significant devaluation of the domestic currency.
