The Chief Whip of the Senate, Senator Ali Ndume, has alleged that the Federal Government is benefiting from the naira depreciation against the dollar.
Ndume was speaking on why the naira continues to depreciate against the dollar.
Ndume said rather than losing out from the naira depreciation against the dollar, the Federal Government is gaining more revenue to fund its 2024 budget.
He stated this while speaking in an interview with Channels Television on Wednesday.
The Chief Whip disclosed that the government would have more naira to spend on its expenditure as the value of the dollar increased.
According to Ndume, the 2024 budget, unveiled in November, relies heavily on dollars for income, given that a significant portion of the government’s revenue stems from crude oil exports, priced in dollars.
He also emphasised that Nigeria’s primary export, crude oil, remains highly sought after internationally, noting that the nation stands to gain from the prevailing exchange rate between the dollar and the naira.
He said, “Don’t forget that this budget is a ‘dollarized’ budget, especially in terms of income. And when it comes to the terms of the expenditure, it’s in naira.
“So if we are getting our money in dollars and the value of the dollar is up, that means we will have more naira in terms of what we spend because we are not spending in dollars, we are spending in naira, while we are getting our revenue in dollars.
“Truly, the value of naira against the dollar has fallen but we are selling our major product that generates income in dollars. And that means any dollar we get now will also be valued at the current dollar-to-naira exchange rate.
“So if you do the analysis critically, it may mean if you balance it up, we may have more money to fund our budget. So technically, Nigeria is even benefiting from the dollar-to-naira hike.”
The nation has been grappling with a persistent shortage of foreign exchange attributed to reduced oil production and inflows from abroad.
Data from FMDQ Securities, a platform overseeing forex trading in Nigeria, indicates that the local currency reached a peak of 1,701/$ and a low of N1,100 in intraday trading before settling at N1,551/$ on Tuesday.
In June 2023, the Central Bank of Nigeria adopted a floating exchange rate system for the naira, unifying all forex market segments, consequently leading to a notable devaluation of the domestic currency.
