AGS NEWS – The Senate has cautioned the executive against enlarging the budget size through a supplementary budget, urging the government to utilize anticipated excess savings from the recent devaluation of the naira to address the deficit.

This warning follows the depreciation of the local currency against the United States dollar from N900/$ to over 1,500/$, a result of efforts by the Central Bank of Nigeria to unify the parallel and official market exchange rates.

The National Assembly had adjusted the 2024 budget benchmark exchange rate from N750/dollar to N800/dollar.

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Senator Solomon Adeola, the Chairman of the Senate Committee on Appropriation, cited economic realities and external consultations as reasons for the adjustment.

In light of the naira’s depreciation, the Senate advised against budget expansion, fearing it could exacerbate the country’s high inflation rate.

They suggested using excess savings to reduce the budget deficit and moderate inflation.

Senator Tokunbo Abiru, Chairman of the Senate Committee on Banking, Insurance, and other Financial Institutions, emphasized the need to avoid increasing the budget size and prioritize deficit reduction. He highlighted the importance of stabilizing the economy before considering any budget revisions.

Senator Ali Ndume, Deputy Chairman of the Senate Committee on Appropriation, noted that the devaluation of the naira could result in significant budgetary savings for Nigeria, given that the country earns over 60% of its revenue in dollars.

He urged prudence in budget management to maximize these gains.

Regarding the rise in food prices, Ndume attributed it to individuals exploiting foreign exchange volatility rather than importation issues.

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Economists weighed in, highlighting the impact of the naira devaluation on government revenue and expenditure.

They emphasized the need for the government to explore non-oil foreign exchange earnings and implement measures to stabilize the economy.