February 22, 2021

It’s unreasonable to expect foreign exchange rate to equal parallel market, Finance Minister tells NASS

Petroleum subsidy

Zainab Ahmed

Zainab Ahmed

*** Says Nigeria, Technically out of Recession

*** N1.74 trillion released as Capital Expenditure at year End 2020, representing 89% Performance

*** As at end of December 2020, N9.97 trillion was Appropriated, N10.16 trillion representing 102% was spent

*** N118 37 billion released for COVID-19 Capital Expenditure

*** Puts Budget Performance as of March at 100%

By Henry Umoru, ABUJA

THE Federal Government yesterday told the National Assembly that it will be unreasonable to expect the foreign exchange rate of naira per dollar to equal that of the parallel market, just as it said that in response to the developments affecting the supply of foreign exchange to the economy, the Central Bank of Nigeria, CBN adjusted the official exchange rate recently to N360 per US$1.

The Federal Government has also told the leadership of the National Assembly that Nigeria is technically out of recession, adding, ” in effect, the economy slipped into recession in Q3 2020 when it recorded a -3.62% negative growth, after a -6.10% negative growth Q2 2020.

“However with the significant and targeted fiscal stimulus as well as other interventions from the monetary authorities, a mild recovery was recorded in Q4 2020 with a 0 11% real GDP growth. This exit from recession is coming much earlier than we had anticipated.”

Speaking yesterday in Abuja when she appeared before the leadership of the National Assembly on the presentation not 2020 Federal Government of Nigeria Budget Performance, Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed said that the Nigerian economy suffered serious challenges in 2020, with the macroeconomic environment significantly disrupted by the COVID-19 pandemic, adding that as at year-end 2020, Federal Government’s retained revenue was N3.94 trillion, representing 73 per cent of the target.

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She said that at the end of January this year, the extended capital component of the 2020 Budget achieved 30 per cent.

The meeting was attended by the President of the Senate, Senator Ahmad Lawan; Speaker, House of Representatives, Femi Gbajabiamila; Deputy Speaker, House of Representatives, Idris Wase, and other principal officers of the Senate and the House of Representatives.

According to the Minister of Finance, Crude Oil prices declined sharply in the world market, with Bonny Light Crude Oil price dropping from a peak of US$72.2 per barrel on January 7, 2020, to below US$20 per barrel in April 2020, adding that the impact of these developments was about 65% decline in projected net 2020 government revenues from the oil and gas sector, which adversely affected foreign exchange inflows into the economy.

When asked about the exchange rate, the Minister said, “I will say that It will be unreasonable to expect that the exchange rate at the market window will be the same as the exchange rate in the black market. But we do have to plan and this is the monetary authorities that are handling this to plan to work as quickly as possible to close the gap that now is close to N100.

“On the fiscal side, it will be to our benefit because we will be able to realise more naira and then we will be able to run the economy.”

Speaking further, Ahmed who told the leadership of the National Assembly that on the Expenditure side, N9.97 trillion was Appropriated as at the end of December 2020, while N10.16 trillion, representing 102 per cent was spent, also explained that of the Expenditure, N3 trillion was for debt service, N3.19 trillion for Personnel cost which includes Pensions.

According to her, as at year-end 2020, N1.74 trillion had been released for Capital Expenditure, representing about 89 per cent of the provision for Capital and our of this, up to N118.37 billion was released for COVID-19 Capital Expenditure, even as she said that hopefully, 2020 Budget Implementation by March will be 100%, adding, ” We expect 2020 Capital Budget implementation to enhance our economic recovery efforts and budget execution.

” Also, with the early passage of the 2021 Budget as well as the uptick in oil price, we expect that the 2021 Budget will significantly contribute towards achieving fiscal sustainability as well as government macro-fiscal and sectoral objectives.”

When the President of the Senate the Finance Minister what will be her estimation for the budget performance as at March since it was 30% as at the end of January, she said, “Your Excellency, the performance of the balance of 2020 budget is a function of funds that are available, we have provided the funds, so agencies have the funds, it is also a function of procurement and the capacity of the agencies to implement. So my hope is that this performance is a hundred per cent. That is not to say that they may end up as a hundred per cent.

“Otherwise the time extension that the National Assembly has been given will not have been so justified and we don’t have maximum utilisation.

“It is difficult for me to say this is what it will be but my hope is that it will be a hundred per cent as well.”

On the issue of complaints by MDAs access the platform as raised by the Speaker, House of Representatives, Femi Gbajabiamila, the Finance Minister said, “I think the complaint was earlier in the year when we were trying to transfer the balances. As far as I know, in the past three weeks, I haven’t heard any such complaints and we have been able to address them. But when we started the transfers, some agencies we couldn’t transfer because of some limitations in the system but we have since been able to transfer the capital component that is been utilised by the agencies budget to the system.”

“On the issue of the performance of the budget, you will agree that while it is important to pass the budget early and get the implementation early, that the agencies do need to prepare and be ready to start the implementation.

“In 2020, we had disruptions due to COVID-19. It affected the performance of the budget but we don’t have those peculiarities in 2021 so we are hoping that the performance will be better than in 2020. The reason why we asked for the extension is that agencies didn’t really have the opportunity despite the early passage of the budget to implement the budget fully and we are glad that the National Assembly has agreed to this extension so that the performance will be better for us to be able to achieve the goals and aspiration of the economy.”

In his remarks, Senate Majority Whip, Senator Orji Uzor Kalu, APC, Abia North said, “I want to commend the minister and her team because this is the first time in the history of Nigeria by December 31, we are having 89 per cent expenditure of the budget, it never happened before. Last year was the very first. The budget had been going 49 per cent, 27 per cent. This means from what the Senate President was asking, it means by March, we should be looking at the budget will be implemented 100 per cent.”

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