By Milcah Tanimu

There are growing indications that the Nigerian Federal Government might need to revisit the 2024 Appropriation Act due to recent developments in the foreign exchange market. Sources within the Finance Ministry reveal that significant fluctuations in the exchange rate have disrupted the financial assumptions underlying the budget.

Since the budget’s passage into law, the official exchange rate benchmark, initially set at N800/USD1, has surged by nearly 50%. This development has led to a substantial increase in both US dollar-based revenue and expenditure, resulting in a doubling of Naira values. The Senate approved a budget of N28.7 trillion, with various components now fundamentally affected by the altered exchange rate.

While the rising exchange rate could positively impact Naira revenue from the oil sector and other USD-denominated sources, experts warn of potential challenges. The depreciation of the Naira may increase the cost of imported goods and services, contributing to higher government spending. Additionally, the upward adjustment in debt servicing costs due to the exchange rate change could strain the budget further.

Financial analysts stress the importance of fiscal responsibility to prevent adverse effects on the economy. Prudent measures are urged to avoid excessive spending and inflationary pressures, as the government grapples with managing the consequences of the fluctuating exchange rate on its 2024 budget.