(Sundiata Post) – Two months, after it described the 2017 to 2019 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) as ’empty’, the Senate finally passed the document, adopting an Exchange Rate of N305 to $1.
The legislative body also approved $44.5 crude oil benchmark and 2.2million barrels per day.
President Muhammadu Buhari had initially presented the document in October 4, 2016 and presented a revised proposal, recommending $42 crude oil benchmark, N305 to $1 and 2.2 million barrels per day.
This followed the adoption of the report of Joint Committees on Finance, Appropriations and National Planning.
Presenting the report, Chairman of the joint panel, John Enoh, called on the Central Bank of Nigeria (CBN) to one initiate measures that will close the gap between the parallel market and the official exchange rate.
“The sustained and widening gap between the official exchange rate and the parallel market has created several loopholes in the system.
However, the recent transition from fixed exchange rate regime to flexible exchange regime appears commendable,” Enoh stated.
The upper legislative chamber approved an inflation growth rate of 12.92 percent, GDP Growth Rate of 2.50 percent, Gross Federally collectible revenue at N10.407 trillion, gross oil revenue N5.010 trillion and gross non-oil revenue at N5.127 trillion.
In October 14, 2016 President Buhari had presented the 2017 budget to a joint session of the National Assembly with a proposed expenditure of N7.298trillion.
The MTEF/FSP also had statutory transfers of N419.02 billion, fiscal deficit N2.356 trillion, real deficit -2.18 percent, new borrowing N2.321 trillion, debt service N1.663 trillion, Sinking Fund N177.46 billion, total recurrent (non-debt) N2.629 trillion, aggregate capital expenditure N2.243 trillion.
Others are: gross non-federation account N265 billion, Net Federally Collectible Revenue N8.247 trillion, Net Oil Revenue N4.095 trillion, Non-Net Oil Revenue N4.152 trillion, Net Distributable Pool Account N8.231 trillion, Special Distribution N124.149 billion, Net Distributable Pool N8.355 trillion and FG retained revenue N4.942 trillion.
Senators who spoke after the report was presented kicked against the exchange rate, saying it is unrealistic considering the fact that the exchange rate stands at N500/$1 at the parallel market.
According to Ben Murray-Bruce, “You have pegged the exchange rate at N305 to the dollar. Now, this is fine. However, nobody in this room today can go to the bank and buy the dollar at N305, and so, we have an exchange rate that is ridiculous, the black market is about N500 is only about N200 differntial. Between 1960 and 1980 despite the civil war, despite the fact that Awolowo was commissioner of finance and the finance is moving on without borrowing a penny the exchange rate between the official and black market there was no differential. In 1980, it was $1 97 cents to the Naira and the difference between official and black market was N10 kobo.
“When Shagari was overthrown in December 31st in 1983, the official rate of exchange was N3 to the dollar, and the black market was N4 to the dollar. So, it was a N1 differential. Three years ago, it was a N10 to N15 differential between the black market and the official rate.
“Today, it is N200, and so, it is better for businessmen to round trip than to manufacture. The point I am making is that the exchange rate we have is simple, and is encouraging round tripping and the exchange rate to encourage round tripping we would never close the gap because the richest people in Nigeria today are treasurers of banks. The exchange rate is wrong, N305 is unrealistic and that is the point I am making.
“The currency should float and it has been floating since independence and for it not to float means that the naira will never be strengthened. For the past two years the naira has consistently been devalued from N225 to N500”.
