2019: Retaining exchange rate at N305 per dollar means pale hope for economy
Since the revelation by the Federal Executive Council (FEC) last week that Nigeria official exchange rate to international currencies especially US dollar is still pegged at N305, financial analysts have seen the position as an agreement by the nation’s economic managers that the economy is still ailing and under pressure.
Analysts say retaining the same exchange rate that accompanied the current but poorly performed 2016-2018 Medium-Term Expenditure Framework and Fiscal Strategy (MTEF&FS) Paper for the 2019-2021 MTEF&FS means that contrary to claims of economic progress in the last three years, nothing was achieved as economic stability is defined by strength of national currencies.
Observers also hinted that retaining the rate is an indication that inflation may continue to go up and the further implication is that just as the ending 2018 national budget, 2019 may not be see strong release of current expenditure allocations due to paucity of funding.
Business Hilights recalls that the Minister for Budget and Planning, Senator Udo Udoma has addressed Nigerians at the end of last week’s FEC that Council has approved the government’s 2019-2021 MTEF&FS paper which proposes NGN8.73 trillion expenditure for the 2019 Budget. The government forecasts GDP growth of 3% next year, and assumes oil output of 2.3mb/d, crude oil price at USD60 per barrel, and an average exchange rate of NGN305/USD.
Certainly, the planned expenditure is down by 5% from the NGN9.12tr planned in 2018, which further confirms that the economy is still under pressure, as the country struggles to meet revenue targets.
Already, the USD/NGN remained flat at NGN362 in the parallel market, while it appreciated by 0.05% to NGN363.84 in the I&E FX window. The back and forth had been running the pendulum over a long period suggesting that adequate and right economic policies are still far within the corridors of power and national economic management team.
