The Director, Institute of Capital Market at the Nasarawa State University, and President, Capital Market Academics of Nigeria, Prof Uche Uwaleke, had said the N1,400 to the dollar exchange rate stipulated in the N47.9 trillion 2025 budget is unrealistic.
The financial expert, in an interview with the News Agency of Nigeria (NAN), yesterday, in Abuja, said such exchange rate projection could give significant room for off-budget funds.
“I think the exchange rate of N1,400 to the dollar is unrealistic based on a one-year outlook of FX flows. It introduces a slack in the 2025 budget implementation, which gives room for significant off-budget funds,” he said.
However, former President of the Abuja Chamber of Commerce and Industry, Dr Chijioke Ekechukwu, said that the N47.9 trillion budget was realistic.
According to the economist, N47.9 trillion may look audacious and humongous, but when converted to dollars at the current exchange rate of N1,735 per dollar, it is about $27.6 billion.
“This is not up to the budget of many states in the United States. The exchange rate, the inflation rate, and the high cost of living have necessitated this huge budget figure. The crude oil price of $75 per barrel and exchange rate of N1,400 are apt,” he said.
He commended the Gross Domestic Product (GDP) growth projection of 6.4 per cent, and the crude oil production of 2.06 million barrels per day, saying, “They look ambitious, but if achieved, we will be on a positive trajectory. When we achieve the crude oil production of 2.06 million barrels per day, we are likely going to achieve the FX rate of N1,400.
“This may not increase GDP automatically, as most of our GDP growths have been driven by the non-oil sector.”
Executive Director of Financial Derivatives, a consultancy firm, Bismarck Rewane, described the $75 per barrel oil price as unrealistic in the face of global uncertainties.
Rewane said the benchmark should be closer to $65 per barrel to allow for fiscal flexibility.
The Chief Executive Officer of CFG Advisory, Tilewa Adebajo, saw a disconnect between the budget projections and Nigeria’s fiscal reality.
Adebajo said N1,400 to the dollar was overly optimistic, adding that inflationary pressure and deficit financing could push rates beyond N1,800.
He said, “The real issue is whether we can afford what we are budgeting for. Revenues for 2024 were projected at N17 trillion, but we consistently implemented only half the budget due to shortfalls. If you cannot fund your plans, you carry deficits forward, a cycle we have seen repeatedly.”
NAN reports that the Federal Executive Council (FEC) had on Thursday, approved the 2025 budget proposal of N47.9 trillion.
The FEC also approved a $2.2 billion new borrowing plan and N250 billion real estate investment fund.
It pegged crude oil price at $75 per barrel, the exchange rate at N1,400 per dollar, and oil production of 2.06 million barrels per day.
The Minister of Budget and Economic Planning, Atiku Bagudu, said the budget approval was part of the Medium-Term Expenditure Framework (MTEF) for 2025-2027, following the Fiscal Responsibility Act 2007.
Bagudu said the executive would put necessary efforts in place to ensure that the 2025 budget estimate was passed by the National Assembly and signed into law by the President before the end of December.
He said with the growth rate of 3.19 per cent, which came in the second quarter of 2024, the Federal Government would continue to tackle inflation and strengthen economic resilience.
