exchange-rate

Agency report

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Some financial experts have commended the Federal Government for using what they called a more realistic exchange rate of N305 for the 2017 budget estimates.

They told the News Agency of Nigeria in Lagos that the proposed exchange rate is  more realistic due to current developments at the foreign exchange market.

Dr Uche Uwaleke, Head of Banking and Finance Department, Nasarawa State University, Keffi, said the 2017 budget proposals were based on realistic assumptions.

“The government should be commended for using a more realistic exchange rate of N305 to the dollar instead of the earlier N290 provided for in the Medium Term Expenditure Framework,’’ Uwaleke said.

He also said the oil price benchmark of $42.5 per barrel was achievable given the OPEC agreements on production cuts.

According to him, the output projection of 2.2 million barrels per day is based on the optimism that the Federal Government will address the agitations in the Niger Delta region.

Uwaleke, however, noted that implementation remained the challenge of the budget, urging the National Assembly to work on its speedy assent and implementation.

Also, Prof Sheriffadeen Tella of the Department of Economics, Olabisi Onabanjo University in Ago-Iwoye, Ogun, said the proposed oil-benchmark price was appropriate.

Tella said the exchange rate and oil output were rather too optimistic as the exchange rate would still be affected by slow growth in foreign reserves and exports, speculative attacks and capital outflows through imports of raw materials.

“All these will not make forex and oil export projection realisable unless we deliberately work against them.

He also called for a speedy passage of the budget for implementation to take off on time for multiplier effects to be felt by the beginning of the third quarter.

Mr Ambrose Omordion, the Chief Operating Officer, InvestData Ltd., said the proposed N7.3 trillion budget would have impact on the economy in 2017 with a review in government policies.

Omordion said that government should invest massively to drive economic diversification and productivity to take the economy out of recession.

“The benchmark of $42.5 is okay and achievable if crude oil price remains above $50 per barrel and the Niger Delta militants are settled to allow peace in the region and meet up with proposed output,” he said.

President Muhammadu Buhari on 14 December presented a budget proposal of N7.30trillion for 2017 before a joint session of the National Assembly.

The President said N2.24 trillion, representing 30.7 per cent of the budget, would be committed to capital expenditure aimed at pulling the economy out of recession.