THERE are indications that the Federal Government may be forced to review the 2024 Appropriation Act as recent developments in the foreign exchange market may have put the financial assumptions in complete disarray.

Sources close to the Finance Ministry told Vanguard that all the major components of the budget has been affected fundamentally by a drastic change in the budget parameters occasioned by the current foreign exchange market realities.

He pointed out that since the budget was passed into law, the official exchange rate benchmark which was N800/USD1 has moved up by almost 50 per cent, a development which has equally doubled both US dollar-based revenue and expenditure.

Consequently, the Naira values have gone up by about 100 per cent. The Senate approved the 2024 Appropriation Bill of N28.7 trillion, against the N27.5 trillion estimate presented by President Bola Tinubu.

The approved budget includes N1.7 trillion for statutory transfers, N8.7 trillion for recurrent expenditure, and N9.9 trillion for capital expenditure. All these figures have now been significantly altered by the development in the benchmark exchange rate which the Senate had moved from N750/ USD1 presented by President Tinubu, to N800/ USD1. Though the high level Finance Ministry official said he doesn’t have details of what is being done, he hinted that all the relevant ministries and government agencies are already working on what may become an amendment to the Act.

Major budgetary dislocation

Financial experts who spoke to Vanguard also indicated that the barely six weeks old budget has suffered a major dislocation following the massive depreciation of the Naira across all foreign exchange market segments. According to their calculations, the implication on the 2024 budget is doubled fold with revenue and expenditure rising at the same time. However, they caution that a more prudent fiscal measure is needed to prevent the worsening of the current economic situation.

Rising revenue, expenditure

The major positive impact of the rising exchange rate, according to them, will be a rise in Naira revenue from the oil sector and other US Dollar-denominated revenues, with forecast at over N15 trillion, about 88 per cent higher than the N7.9 trillion actual budgeted amount. They also noted that this development may significantly reduce budget deficit to about N2.2 trillion from N9.2 trillion, if properly managed. But this is just one side of the development.

They also see a possibility of this exchange rate revenue gain being wiped out by a corresponding rise in expenditure as a result of US dollar-denominated obligations such as debt servicing and general foreign exchange denominated expenditures in the budget. At a debt service expenditure budget of N8.25 trillion, they forecast a likely rise to over N16 trillion at current exchange rate of about N1650/ USD1. They also pointed out that a quantum leap in Naira revenue could spark off profligacy and fiscal indiscipline, which will erode the exchange gains. The impact of this fiscal misbehaviour, according to the analysts, will further compound inflationary pressures in the economy, which will also drive up cost of executing the capital expenditure budget significantly.

This development, according to them, will be further aggravated by labour union pressures for increases in minimum wage which is expected to drive up personnel cost component of the recurrent expenditure. Overall, the multiplicity of rising capital and recurrent expenditure will wipe off the expected exchange rate revenue gain and even stoke a further rise in budget deficit by over 100 per cent to about N20 trillion.


Experts’ insight
Giving insight into the impact of the exchange rate development on the Federal Government’s 2024 budget, Ayorinde Akinloye, an investment analyst, noted that the rise in postbudget exchange rate would be positive for the FG’s revenue performance in naira terms in 2024. He explained that a weaker naira ensures that USD revenues generated through oil sales and taxes are higher when converted to Naira. “However, this will require the budget exchange rate for recognizing revenues to be adjusted to current realities’’, he said.


He further stated: “While revenue is likely to be higher, USD-based expenditure like foreign debt servicing will also increase in naira terms. “In addition, it is important to note that exchange rate and inflationary pressures could force actual expenditure to exceed the budgeted sums for different capital projects. “Also, a consistently weaker naira will force upward adjustment of minimum wage which will contribute to higher recurrent expenditure for the FG. “Thus, the impact will likely be mixed with marginal positive effects on budget deficits.” Speaking on the impact of the exchange rate on the 2024 budgeted debt servicing expenditure, Akinloye said: “Actual debt servicing will end up higher than the budgeted sum. This will largely be driven by higher naira value for USD debt servicing costs.”

Also speaking on the likely implications of the depreciation of the Naira on the 2024 revenue estimate, Gafar Bashiru, Senior Associate, Parthian Partners, a financial investment and advisory firm, said: “A weaker Naira, higher than the N800 exchange rate budget benchmark, can potentially boost government’s revenue from exports denominated in dollars, such as oil and gas. “This is because more Naira are received for each dollar of export earnings. A weaker Naira can, however, also increase the cost of imported goods and services, which the government relies on for some of its operations and projects. “This can lead to higher spending and potentially reduce the net impact on revenue. “I would expect a fiscally responsible government to make an effort to push for a net positive impact.” On the implication of the new exchange rate on the 2024 budget deficit, Bashiru, said: “The increased Naira revenue from oil sales by the NNPCL could reduce the budget deficit, as long as spending remains within budget. “However, this depends on how effectively the government manages the additional revenue. If the government uses the additional revenue to increase spending, it could lead to a wider deficit. “Additionally, the higher exchange rate could increase the cost of servicing external debt, given that 38% of Nigeria’s debt is denominated in foreign currencies as of June 2023.

“This proportion is expected to grow significantly, given the currency devaluation.” Continuing, he said: “Higher exchange rate will likely increase the Naira cost of servicing external debt. “This is because each dollar of debt translates to more naira to repay. This could put a strain on the budget, especially if the government’s Naira revenue does not increase proportionally. “If the government leans more on Naira borrowing, they might be able to mitigate the impact of higher exchange rate on debt servicing costs.” Also commenting on the post-budget exchange rate for the 2024 revenue estimate, Tajudeen Olayinka, Analyst/ CEO, Wyoming Capital and Partners, said: “It will improve collectable Naira revenue and could also increase Naira component of the budget as multiple Naira expense heads adjust to Naira/Dollar realities.” On the implication of the new exchange rate on 2024 budgeted deficit; he said: “It will, on a balance of probability, reduce the size of the deficit, as government cedes certain economic funding to private sector players who are obliged to recover costs fully.

“More Naira will be available for servicing Naira related debts, especially local debts. And certainly too, more Naira will go into circulation, further raising the prospect of inflationary spiral.” In his own comment, Analyst and Vice Executive Chairman, David Adonri, Highcap Securities Limited, said: “Recent computation of official foreign exchange rate means that FGN will convert its Dollar income at the new rate which will multiply it’s revenue in 2024.” On the implication of the new exchange rate on 2024 budgeted deficit, he said: “The increase in revenue to FGN that can arise from the new exchange rate ought to reduce 2024 budget deficit but impact of external debt service may neutralize the FX gain.


“At the new exchange rate, more Naira will be needed by FGN beyond the budget estimate to service external debt. ‘‘What FGN has done is to forecast a forward exchange rate based on current trajectory for planning purposes. ‘However, if the market is truly deregulated, market forces will ultimately determine the exchange rate.” Commenting as well, Victor Chiazor, Analyst and Head of Research & Investment, at FSL Securities Limited, said: “The constant

A 50 kilograms bag of cement in the Federal Capital Territory has surged to between N10,000 and N15,000, DAILY POST reports.

A market survey conducted on Friday by DAILY POST in Gwarimpa, Area 10, Kubwa, Lugbe and Dawaki showed that a 50kg bag of Dangote cement is N10,000 and BUA cement stood at N15,000.

A retailer in Gwarimpa, Yinka Adebayo, said that the price of Dangote cement is N10,000 while that of BUA is N15,000.

He said he sold a bag of cement for N6,000 in January 2023.

“We sell Dangote cement at N10,000 per bag, and BUA is N15,000. Unfortunately, it will surprise you that I sold the same bag of cement, N5,500 to N6000, last month,” he said.

Similarly, Rukiyat Abdullahi, a retailer in Kubwa, said Dangote cement is sold for N10,200 while BUA goes for N16,000.

“Dangote is now N10,200 while BUA goes for N16,000 per bag”, she told DAILY POST on Friday.

At Lugbe, the retailers confirmed to DAILY POST that Dangote and BUA cement prices are N10,000 and N15,000, respectively.

Meanwhile, Minister of Housing and Urban Development, Arc. Musa Dangiwa decried the astronomical rise in the price of cement and other building materials across the country.

He said the price hike was unacceptable and insisted the fluctuation in the exchange rate of the dollar could not be blamed.

Recall that for more than five months, the Cement Producers Association of Nigeria cautioned that the Federal Government’s plan to introduce concrete roads could increase cement prices to N9,000 per bag.

The development comes amid a continued soar in Nigeria’s inflation. The National Bureau of Statistics, in its Consumer Price Index report for January, said inflation soared to 29.90 per cent.

A group of armed individuals, described as bandits or terrorists, launched a series of attacks in Katsina state on Wednesday night and Thursday morning, leaving at least three people dead and several others abducted.

In a horrifying incident during Ishai prayer yesterday night, the hoodlums opened fire on the unsuspecting Muslim worshippers, killing three of them.


A source who narrated the incident to Vanguard said, “The assailants descended upon our Muslim brothers during Ishai prayer. Tragically, two of them lost their lives within the mosque premises, while a third met a fatal end outside the mosque while attempting to escape the onslaught. Four others sustained injuries and are currently undergoing treatment at a hospital in Kankara.”



The chaos, he said, escalated as the hoodlums, further abducted a man and two women during the attack. “Unfortunately, the man’s refusal to go with the assailants cost him his life as he was mercilessly butchered for daring to defy the abductors,” the source revealed.

In a separate incident around 2:30 am today, the marauding bandits targeted the residence of Sani Maikifi, a vigilante member, in Ungwar Tudun Boka within Kankara township.
Miraculously, Sani managed to escape through his backyard, evading the clutches of the hoodlums. But his wife and son were not as fortunate. They were abducted by the hoodlums.

The source revealed that the hoodlums who had been tailing Sani for some time now, struck silently, infiltrating the community within Kankara township without raising alarm.

In another separate attack, at approximately 11:30 PM on Thursday, armed individuals stormed Dangani in Musawa local government, shooting sporadically. According to a source, the criminals were trailing a wealthy individual from the south, who had visited the area to offer condolences to a grieving relative.

He was however fortunate to have escaped their clutches. In return, the hoodlums abducted scores of people from the area, the source disclosed.

Nigeria’s crude oil production marginally dropped in January 2024 to 1.419 million barrels per day (mbpd) from 1.422mbpd in December last year.

The Organisation of Petroleum Exporting Countries, OPEC, disclosed this on Tuesday in its February Monthly Oil Report.

Accordingly, the figure represents a 3,000 bpd decrease in Nigeria’s crude oil production, OPEC said, quoting secondary sources.

“According to secondary sources, total OPEC-12 crude oil production averaged 26.34 mb/d in January 2024, lower by 350 tb/d, month-on-month. Crude oil output increased mainly in the UAE, Saudi Arabia and Venezuela, while production in Libya, Kuwait, Iraq and Algeria decreased,” the report said.

However, the report noted that that the nation’s oil production rose from 1.33mbpd to 1.42mbpd, based on data obtained through direct communication.

The development comes as the Chief Executive Officer of the Nigerian Upstream Petroleum Regulatory Commission, Engr. Gbenga Komolafe, while presenting an address at the Petroleum Technology Association of Nigeria, PETAN, Sub-Saharan Africa International Petroleum Exhibition and Conference, on Tuesday, said Nigeria’s oil production currently averages 1.586mbpd, made up of liquid 1.33mbpd output and 256,000 condensate oil production.

DAILY POST recalls that Nigeria’s crude production increased month-on-month in December.

Meanwhile, the country’s output is below its 2024 budget target of 1.78mbpd.

Nigeria’s 2024 budget implementation depends heavily on proceeds from crude sales.

Kobojunkie:
The longest for me was about 1.5 minutes. I wanted to say a prayer but was very tired at the same time. I did as Jesus Christ commands of His followers in Matthew 6 vs 6 - 15. The reason it took so long was because I kept forgetting the lines.

The Christian Association of Nigerians in the 19 Northern States and Abuja, on Friday, expressed concern over the prevailing harsh economy, declaring that the suffering in the country is becoming unbearable to ordinary Nigerians.

Besides, the organisation noted that of grave concern was the increasing security challenges as well.

This is coming on the heels of similar concern raised by the Sultan of Sokoto, Alhaji Muhammadu Abubakar lll-led Jama’atu Nasril Islam that urged both federal and state governments to intervene in the prevailing economic hardship which had forced Nigerians into protests.

The PUNCH reports that on Monday through Tuesday, angry youths and women took to the streets of Minna, the Niger State capital, and Kano to protest what they described as the rising cost of living in the country.

Similar protests also erupted in Ondo State in the Southwestern part of the country.

In Niger, a group of women reportedly blocked the ever-busy Minna-Bida Road at the famous Kpakungu Roundabout and called on the Tinubu administration to address the challenge of ‘hunger in the land.’ The mob deflected attempts to quell the protest by security operatives who fired tear gas canisters into the crowd and arrested others.

In the face of this, the Northern CAN, in a statement released by its Secretary-General, Elder Sunday Oibe, in Kaduna, called on the Federal Government to, as a matter of urgency, step in and address the depressing economic and escalating security situation in the country.

According to the organisation Secretary, the suffering in the country is becoming unbearable for ordinary Nigerians as the high cost of foodstuffs, transportation, goods, and services have made life difficult for many Nigerians.

All these, he argued, were being compounded by the escalating insecurity occasioned by rampant killings and kidnapping for ransom.

He also said the Christian body was sad over the continued attack on Plateau State, where no fewer than 300 people were killed while calling on the government to do everything possible to halt the killings not only in Plateau but across the country.

The statement is entitled, “The Federal Government should urgently address the escalating insecurity and hunger in the country.”

It said, “The Christian Association of Nigeria in the 19 Northern States and the Federal Capital Territory wishes to express its deep concern over the prevailing economic hardship and the increasing security challenges across the country.

“The suffering in the country is becoming unbearable for ordinary Nigerians. The high cost of foodstuffs, transportation, goods, and services has made life difficult for many Nigerians.

“The epileptic power supply has led to the collapse of many small businesses.

“The continued decline in the value of the naira and the seeming inability of the government to address the situation has completely weakened the purchasing power of ordinary Nigerians.

“The situation is further compounded by escalating insecurity occasioned by rampant killings and kidnapping for ransom.

“Unless justice is done, by ensuring that the perpetrators and whoever are the sponsors are brought to book, all the talks about peace may be mere rhetorics.

“Government must take urgent steps to address the depressing economic and escalating security situation in the country.

“We called on governments at all levels to support our security agencies with all that is required to fight these criminals.

“We also called on Nigerians to cooperate with security personnel and pray for them as they confront these enemies of the nation.”

This was just as the Northern CAN blasted regional groups such as the Arewa Consultative Forum, the Northern Elders Forum, as well as some Northern Senators for opposing the government plan of relocating some departments in the Central Bank of Nigeria and the Federal Airports Authority of Nigeria, from Abuja to Lagos.

“It is unfortunate that we introduce ethnic and regional sentiments in a harmless policy that is meant to streamline operations and make the agencies more effective and reduce cost,” the statement said.