The Senate has warned the executive against increasing the budget size through a supplementary budget, advising the government to use the excess savings that are expected to be made from the recent depreciation of the naira to fund deficit.

This came against the backdrop of the depreciation of the local currency against the United States dollar from N900/$r to over 1,500/$, following a series of moves by the Central Bank of Nigeria to unify the parallel and official market exchange rates of the naira.

The National Assembly had in December moved the 2024 budget benchmark exchange rate from N750/dollar sent by President Bola Tinubu to N800/dollar.

Giving reasons at that time, the Chairman of the Senate Committee on Appropriation, Senator Solomon Adeola, explained, “The current price of the dollar at the black market is between N1200 and N1300 and in the Central Bank of Nigeria, it is between N950 and N1000 and we have a budget which was pegged at N750, if you look at the gap, you’d realise that has covered a lot of gaps already.”

“Again, we did some external consultations, most especially in the area of oil benchmark and petroleum resources, if we had gone in that line, we’d have pegged it at N850/N900 to a dollar and we agree that we want to be conservative in our approach, so that nobody will think that we want to increase the budget for any ulterior motive, that was why we left it at N490bn out of which N44bn is for statutory transfer, so effectively, the increment is about N446bn that is going into the Federal Government pocket as consolidated revenue.”

“So, you can see that what necessitated our action is the economic reality and what is obtainable in both the black and open markets.”

However, following the depreciation of the naira from N900/dollar to over N1,500/dollar, the Senate has advised the Federal Government against increasing the budget size, saying the move could worsen the country’s already high inflation rate.

Rather, the Senate said the executive should use the excess savings to cut down on loans it would seek to fund the deficit in the budget.

The Chairman of the Senate Committee on Banking, Insurance and other Financial Institutions, Tokunbo Abiru, in an exclusive interview with The PUNCH, advised the Federal government to avoid increasing the budget size.

He also advised that gains from the budget should be spent on reducing the budget deficit.

He said, “My position will be to advise that the Federal Government not to expand the size of the budget, rather use whatever gains that come to moderate inflation excess; and even the appetite for contracting loans for deficit should be moderated.”

He also explained that it was too early to determine the workability of the budget despite the volatility of the naira.

He explained, “What you use in budgeting is average rate not spot rate. What you are seeing today in the forex market is still looking like a spot rate.

“And you can see all attempts, all efforts from the end of Central Bank of Nigeria and the federal government is to find a way to stabilize. I can’t tell what the stabilized number would be.”

Abiru added, “So it will be too hasty to begin to judge from the current spot performance, not until when we have something close to our average or stable position. That’s when you should not be thinking about any revision of the budget.”

Also speaking in the same vein, the Deputy Chairman of the Senate Committee on Appropriation, Senator Ali Ndume, said the country would be saving over N600 on every dollar in the 2024 budget.

According to him, Nigeria earns over 60 per cent of its revenue in dollars and, as such, the fall of the naira against the dollar has created huge savings for the country.

Explaining he said, “We should be talking about budget excess not deficit. We spend naira, our budget is in Naira and we are spending in naira.

“The crude oil is our major source of income and it is being sold in dollars. So, if we are to analyze things, then we are making more money than losing money. The Federal Government pegged it first at N750 but at the National Assembly we jerked it up to N800.”

Ndume added, “So, we are selling our crude at about N1400 instead of N800, so we are making about N600 budget excesses. So, we have more money to spend.

“The budget is a dolarised budget so to say, such that our income is in dollars and expenditure is in naira. We are spending naira and earning dollars.”

On the increment in the prices of foodstuff, the lawmaker said that the hike in the prices was caused by Nigerians who were taking advantage of the volatility of the foreign exchange.

Ndume added, “The problem we have is in foreign exchange, but most of our foods are produced locally. So, the increment is on people who decide to take advantage of the foreign exchange.

“For instance, we don’t import corn, beans and other foodstuff, so why are the prices of foodstuff going up?”

Economists react

A professor of Economics at Babcock University, Ilisan, Ogun State, Segun Ajibola, said the rise in dollar would affect both the budget revenue and expenditure.

“You know budget is both sides – revenue and expenditure. The first thing we should realise is that if government earns dollar, the government will monetise that dollar at the exchange rate, then expenses will be incurred at that same exchange rate, so it will affect both the revenue and the expenditure,” Ajibola said.

He noted that foreign exchange accounts for about 60 per cent of total government revenue, stating, however, that there might still be a shortfall because this year’s budget is a deficit budgeting.

“So, the onus is on the government to drive supply. If the government can drive the supply of foreign exchange earnings, not just from the monolithic earning that we have, where we earn most substantially from crude oil; If we can drive non-oil foreign exchange earnings, then it will help. However, the important thing is to stabilise the economy.

“The Federal Government should see what could be done quickly, what we call quick wins. How can we redirect our exposure in the foreign exchange market? If our local refineries work, we can cut off importation of fuel. There are some items we need not spend foreign exchange on, like toothpicks,” the don said.

He, however, observed that there might be the need to review the budget later in the year.

Speaking, the Managing Director/Chief Economist of Analysts’ Data Services and Resources, Dr Afolabi Olowookere, said that the gap between the projected benchmark of the dollar in the 2024 budget and the current rate of the dollar had multiple effects on the government and the economy.

“Devaluation will help their budget in terms of revenue because money coming from abroad will now be changed at the rate of N1,400/dollar or N1,500/dollar.

“It is also possible that the FG may also lose. There are two ways that they can lose. The first way is, if they need to import or travel, they have to look for N1,400, N1,500 to pay and most contractors, I know would have gone back to the government to say that they cannot execute their contracts at the previous rate.

“So, on one hand, the government will be making more money from the conversion, and on the other hand, the government will be paying more for everything it has to import,” he stressed.

Touching on the third impact, Olowookere said that the exchange rate was already affecting the local economy,

“Look at cement, which is largely produced here, has gone up. So, effectively, the government will benefit but not as much as it would have benefited,” he reiterated.

Similarly, the Managing Director at Afrinvest Securities, Ayodeji Ebo, told one of our correspondents that the devaluation of the naira was positive for the government, doubling revenue when converted to naira.

“However, in terms of capital expenditure or spending, it will affect the Nigerian government because the cost of those projects would have doubled. So, in that case, the government would have to channel more funds to achieve the targeted projects. For example, if they have budgeted N3tn for capital expenditure, it now means you would spend close to N6tn or more.

“Given the current situation, we need to focus on reducing oil theft. When we export oil, we earn in dollars. When you convert it to naira, it becomes a significant amount of money,” Ebo noted.

In the same vein, an economist, Dr Elias Aliyu, maintained that the government pegging the exchange rate at N750 to $1, and later adjusting it to N800 by the National Assembly, appeared to be an overly ambitious move.

Meanwhile, a professor of Economics at the University of Uyo, Akpan Ekpo, said the devaluation of the naira had rendered the government’s exchange rate peg in the 2024 budget infeasible.

According to him, the government would either have to readjust its spending or float a supplementary budget to cushion the damage the current exchange rate has done to its budget.

“The oil we are exporting now, we already got the money a long time ago through the future market. Knowing the government, they would have to borrow to implement the budget.

“The budget already had a deficit. We will now have a higher deficit. They will now have to go for a supplementary budget or adjust expenditure through what we call expenditure switching. But knowing the government. They will want to borrow,” he said.

Speaking further, Ekpo urged the government to consider reviewing some of its policies to attenuate the severe impact the economic reforms have had on the populace.

The Senior Staff Association of Nigerian Universities and the Non-Academic Staff Union of Nigerian Universities and Allied Institutions will commence a nationwide strike today (Monday), to protest their withheld four months’ salary.

The National President of SSANU, Muhammed Ibrahim, informed The PUNCH on Sunday that the two unions were set for their nationwide strike.

But the Minister for Education, Prof. Tahir Mamman, said he was unaware of SSANU/NASU’s planned strike.

In a text message sent to one of our correspondents on Sunday, the minister said, “I am not aware of any planned strike. But I know the matter is receiving attention at the highest level of govt. I will get across to them.”

The Federal Government, implementing the no-work, no-pay policy, had withheld the salaries of university workers following a prolonged strike in 2021.

However, the Federal Government in February released four-month withheld salaries to members of the Academic Staff Union of Universities but left out SSANU and NASU.

The two unions, in several letters, demanded that their withheld salaries be equally released and gave the Federal Government an ultimatum with a threat to embark on a nationwide strike.

Speaking to The PUNCH on Sunday, the SSANU leader, Ibrahim, said, “The Joint Action Committee of NASU and SSANU has inundated the Federal Government with the need to pay the withheld four-month salaries of our members in the federal universities and inter-university centres as done for our academic counterpart to no avail.

“As a matter of fact, the attention of Rt. Hon. Femi Gbajabiamila, Chief of Staff to the President, and Prof. Tahir Mamman, SAN, the Honourable Minister of Education, was called to this injustice and unfair treatment of our members in our letter referenced JAC/NS/VOL.I/277 and dated 13th February 2024. We called on them to resolve the issue positively before it leads to an unnecessary upheaval in our university sector.

“In a similar vein, a press release was issued on 1st March 2024 and the Federal Government was given a seven-day ultimatum to do the needful in respect of the payment of the withheld four months’ salaries but nothing was done on the matter.

“Having waited patiently for the ultimatum to expire without any positive response from the government, this is to direct our members in the universities and inter-university centres throughout the country to commence a seven-day warning strike effective Monday, 18th March 2024 in the first instance.”

Also, SSANU National Vice-President, Abdussobur Salaam, said the government had not made any offer to the union since it started the agitation for payment of its withheld salaries.

“We have not heard anything from the government; they are not saying anything about payment of the salaries, no promises, no negotiation. We are not saying they should pay everything at once, at least they should show commitment, talk to us, and tell us when we should expect the payment, but nothing from them, they have been silent even after our warning strike press statement, still, nothing.”

Nearly a year and a half after his inauguration, Osun State Governor, Ademola Adeleke has finally moved into the state’s government house in Osogbo, the state capital.

Naija News recalls that Governor Adeleke, who was sworn in on November 27, 2022, diverged from the norm established by his predecessors by choosing not to move into the state’s government house immediately.

His decision had drawn criticism, especially from the opposition All Progressives Congress (APC), but it was defended with the explanation that the Government House was undergoing renovations.

However, on Sunday, a statement from the Governor’s spokesperson, Olawale Rasheed, announced the completion of the renovation works, paving the way for Adeleke’s move into the government house.

The renovation encompassed extensive work on the main house, completion of a previously abandoned multi-bedroom guest house, remodelling of several structures, and repairs to numerous facilities that had fallen into disrepair.

During the unveiling ceremony of the refurbished Government House, attended by top state officials, Governor Adeleke affirmed his administration’s commitment to upgrading state assets, regardless of their origin.

“I have upgraded the Government House just as I rehabilitated the Governor’s Office. We ensured the Government House was rescued from the open neglect we inherited,” Adeleke stated, emphasizing the importance of maintaining state assets for future generations.

The Governor also highlighted that his administration is not only focusing on completing inherited projects but is also initiating new ones, aiming to fulfil the five-point agenda promised to the citizens of Osun State.

However, reacting to the development, Osun APC Chairman Tajudeen Lawal criticized the project as a misplaced priority, especially in light of the economic challenges faced by the state’s residents due to the removal of the federal fuel subsidy.

Lawal accused Governor Adeleke of focusing on less impactful projects while his counterparts in other states were seeking ways to alleviate the economic burden on their citizens.

The lawmaker representing Delta South Senatorial District, Joel-Onowakpo Thomas, has called for a thorough investigation into the murder of 16 military personnel in Okuama Community, Ughelli South Local Government Area of Delta State.

The lawmaker, in a statement on Sunday in Warri, condemned the act and described it as “a crisis taken too far”.

While calling for calm, he noted that the military operatives were on a peace mission to rescue one Mr Anthony Aboh, who was allegedly kidnapped in Okuama Community.

Thomas, who is also the Vice-Chairman of the Senate Committee on Defence, commiserated with the military authority and families of the slain soldiers.

He called for a holistic investigation to unearth the remote causes of the crisis and urged both the state and federal governments to urgently intervene to prevent it from escalating.

“There is a need for the security agencies to go after the masterminds of the heinous crime.

“There is also the need for the military to tactically deploy intelligence in tracking the masterminds to avoid the killing of innocent people in Okuama Community.

“I commiserate with the military authority, families of the slain soldiers as well as others who may have lost their loved ones to the crisis.

“I urge the people of Okuama Community to assist the military to fish out the killers of the gallant soldiers,” Thomas said.

The Nigerian Army had in a statement issued on Saturday confirmed the death of 16 soldiers in the conflict between the military and youths of the community.

According to the statement issued by the acting Director of Defence Information, Brig.-Gen. Tukur Gusau, a Commanding Officer, two Majors, one Captain, and 12 other soldiers were affected.