Zainab Ahmed, minister of
finance, budget and national planning, says the fiscal authority ministry is
working with the Central Bank of Nigeria (CBN) to close the gap between the
official and unofficial exchange rates.
The national currency is changing
for N411/$ at the official segment of the market and N570/$ at the parallel
market.
Many believe the parallel market
rate is a reflection of its true value.
Recall that
Vice-President Yemi Osinbajo called on the CBN to allow the naira reflect the
realities of the market.
Osinbajo had said the exchange
rate is artificially low and deterring investors from bringing foreign exchange
into the country.
While speaking during an
interview with Bloomberg TV, on Friday, Ahmed said the government is focused on
improving foreign exchange inflows.
She said that with the Dangote
Refinery set to begin operation in 2022, the country would be able to save
about 30% of its present current foreign exchange (forex) expenditure on
imports.
She also said that the country
would earn forex through petroleum product sales to foreign countries.
“It is our desire to be able to
reduce the gap between the unofficial market rate and the official market rate.
We are working with the central bank to do that,” she said.
“Again, what we have to do is to
improve the sources of foreign exchange earnings. Right now, the predominant
source is oil and gas.
“When oil and gas revenues are
not coming as we projected or when we have huge expenditure in terms of
subsidy, we have the problem of supply not being able to meet demand.
“Like I explained earlier on, with a saving of
up to 30 percent of forex expenditure with the removal of the need to buy PMS
from out of the country, we will have more FX to meet demand.”
Also speaking on the surge in
crude oil prices, Ahmed said: “The high price of oil means that we would be
able to earn more revenue. At $85 per barrel is way above the $40 per barrel we
have on our 2021 fiscal projections.”
“But we also have the challenge
of having to buy petroleum products for use in-country, because we do not have
functional refineries. So that eats into the revenues we would have otherwise
realised.”
The minister noted that although
revenues were growing, expenditure grew at a much faster rate.
“So, we do have a revenue problem. And we are
working to curtail expenditure by being able to limit agencies’ expenditure to
50 percent of their revenues,” she said.
She blamed Nigeria’s high debt
service to revenue ratio on the large expenditure base of the country.
“Our debt service to overall
revenue is high because we have a very large expenditure base,” she added.
“We have a large proportion of
our budget dedicated to payroll, and Mr President had decided from the
beginning of his administration that we were not going to disengage staff.
“So, you have to pay salaries, you have to pay
pensions. And also, we have to fund the other arms of government, which are the
judiciary and the legislature.”
Given the success of the
country’s last bond, the minister said the country could approach the foreign
capital market again this year.
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