·US to press Nigeria on exchange rate flexibility
Tobi Soniyi in Abuja and Zacheaus Somorin with agency report
Fresh facts have emerged as to why President Muhammadu Buhari is yet to sign the 2016 budget into law even though highlights of the Appropriation Bill have been transmitted to his office by the National Assembly.
A source at the presidency, who confirmed to THISDAY that the president had indeed received the budget, said however that Buhari could not assent to it because what was sent to him contained only the highlights and not the full budget.
The source, who said he was not authorised to speak on the matter, noted that even though the president was very anxious to sign it into law, he could not do so because the highlights do not contain the amendments made to the budget by the lawmakers.
THISDAY had exclusively reported on Monday that the president was awaiting the submission of the budget by the legislature, following which the document would be sent to all the ministries, departments and agencies (MDAs) of government for review to ascertain any significant amendments carried out by the legislature.
The objective of the review is to verify if any of the amendments by the legislature are inconsistent with the spending plan of the executive, thus rendering it unimplementable.
Throwing more light on the issue yesterday, the presidency source said: “As a result, the president has been handicapped in signing the bill because he does not know what is contained in the details and what adjustments the National Assembly must have made to the proposal sent to them.
“Although he is anxious to sign the document so that it’s implementation can start immediately, he is afraid he may later discover, when the details are sent, that what is contained therein is not implementable.
“He wishes the National Assembly could send in the details speedily so that it could be considered for assent.”
Another source, who said he monitored the way the National Assembly had handled the budget, disclosed that either the National Assembly did not complete work on the budget or the lawmakers were playing politics with the document which affects the economy of both the country and its citizens.
“The National Assembly may just have passed the bill to pass the buck to the executive and escape the wrath of the public which was gradually suspecting it of sabotage.
“As it is, the Budget Office cannot also work on the budget for implementation because it is the details and not the highlights that they convert into implementable templates for the respective MDAs,” the second source said.
THISDAY also learnt that ministers are also eager that the budget be signed into law so they can start implementing their programmes, but have agreed with the president that the budget can only be signed into law when the details have been transmitted to the president.
They are particularly worried that the year is gradually advancing and the provision of the law in respect to spending from the previous year’s budget is not helping matters because of the low capital provision in 2015 budget.
The presidency was of the view that because of the low provision made last year for capital expenditure, spending 50 per cent of that provision in the first half of this year would have no meaningful impact on infrastructure projects.
Meanwhile, the United States said yesterday that it would press Nigeria in talks this week to adopt a more flexible foreign exchange rate to boost growth and investments in Africa’s largest economy.
According to Reuters, U.S. Assistant Secretary of State for Africa, Linda Thomas-Greenfield, told an audience at the U.S. Institute of Peace that Nigeria should ensure that the value of the naira currency versus the U.S. dollar was “more realistic”.
“While most people complain about the possibility of there being a devaluation, people are already operating on a devalued currency, and the only people who are not, are people who are doing it officially,” Thomas-Greenfield said.
“Our recommendation is, and we will have discussions about it… that they should look at the exchange rate and try to make the exchange rate more realistic to what the value of the naira is to the dollar,” she added.
She spoke before talks in Washington to be launched by Secretary of State John Kerry and which will focus on Nigeria’s economy, security and development.
Buhari is slated to depart for Washington D.C. today for the fourth Nuclear Security Summit. He will be expected to hold bilateral talks with U.S. officials on the sidelines of the summit.
Nigeria faces its worst economic crisis in decades as the falling price of oil has slashed revenues, prompting the Central Bank of Nigeria (CBN) to peg the currency and introduce curbs to protect foreign exchange reserves, which have fallen to an 11-year low.
Some members of central bank Monetary Policy Committee (MPC) have said the naira should be devalued.
Thomas-Greenfield said the parallel currency market in Nigeria was “alive and well”, warning that a rigid exchange rate, capital controls and import bans could undermine Buhari’s efforts to expand economic growth and fight corruption. Buhari has rejected the idea of devaluing the naira.
“Capital controls that limit access to foreign exchange rewards insiders and undermines the stated goals of Nigeria to increase domestic production because, both Nigerian and expat investors alike, tell us many businesses are unable to obtain the capital to purchase badly needed intermediate goods,” she said.
The naira trades some 40 per cent below the official rate on the black market versus the dollar. The central bank last year pegged the exchange rate to curb speculative demand for the dollar and conserve foreign exchange reserves after it restricted access to hard currency for imports of certain items, frustrating businesses.
The International Monetary Fund (IMF) has called on Nigeria to lift the curbs and let the naira reflect market forces more closely, as the restrictions have significantly affected the private sector.