Exchange Rate Benchmark for 2020 Budget Unrealistic, Says CUPP

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Onyebuchi Ezigbo in Abuja

Coalition of United Political Parties (CUPP) has faulted the exchange rate of N379 to a Dollar used in the 2020 budget estimates presented to the National Assembly by President Muhammadu Buhari.
It said the exchange rate was unrealistic due to differing exchange rate windows being operated by the Central Bank of Nigeria (CBN).
It said government’s position was capable of distorting projections by the private sector which usually required forex for their day to day operations.

In a statement issued yesterday by its National Secretary, Chief Peter Ameh, CUPP also expressed concern over the idea of new borrowing of over N4 trillion to finance a deficit budget.

“I must sincerely commend Mr. President for the early submission of the 2021 budget proposal, and its prompt consideration and passage by the National Assembly will be highly appreciated by the Nigerian people.

“The submission of the budget proposal to the National Assembly in good time will definitely allow the National Assembly sufficient period of time to consider the budget and also give the ministries, agencies, and parastatals to defend their budget proposals,” he said.

Ameh said the budget parameters and assumptions were realistic except the exchange rate.
On the aspect of Gross Domestic Product whose growth rate is projected at 3% was a little ambitious in view of the impact of the COVID-19 on the economy expected to be linger beyond next year.
He said: “The capital allocation to education and health sectors are more than that of defense which is an indication of a departure from the stick approach to carrot approach.

“Finally, the idea of new borrowing of over N4 trillion to finance a deficit budget is worrisome by allocating over three trillion to debt servicing alone, this call for serious thought. The N13.08 trillion estimated budget is a huge amount of money to make impact but high cost of servicing debt which is above N3 trillion is very massive, and may act as a drag on the economy.

“All the budget assumptions look fairly realistic if monetary and the fiscal authorities will match their words with the real action by complementing and harmonising each other with good policy framework to drive the economy forward.”