The three tiers of government, Federal, State and Local government are set to earn a whooping additional N212billion revenue in 2020 from the joint plan of the exchange rates Platforms, which will further devalue the national currency to as low as N400 per dollar.
Last week in the Investors and Exporters window (I&E), the dollar was traded officially between N385 per dollar and N386.5 per dollar.
Financial experts however appraised that further devaluation of the naira and unification of the foreign exchange markets despite its many benefits also foretell serious negative effects, including higher pump price of petrol and further increase in prices of goods and services nationwide.
In the revised Budget 2020 approved by the National Assembly, the Federal Government forecasted oil revenue of N1.91 trillion into the federation account, based on oil price benchmark of $28 per barrel, 1.8 million barrels per day production and exchange rate of N360 per dollar.
However, with expectations of further devaluation of the Naira by 11.1 percent, to N400 per dollar from N360 per dollar in the official market, as expected by foreign exchange participants, the forecasted oil revenue may increase by N212billion to N2.12trillion.
The Ministry Of Finance said in a document titled, “Addendum to the 2020-2022 Medium Term Expenditure Framework and Fiscal Strategy Paper”, stated that “While the CBN continues to make strenuous efforts to stabilize the exchange rate, it is generally expected that the naira will suffer further devaluation”, Thereby, making indications the government has intentions to unify the exchange rates and hence further devalue the naira in order to generate more naira flows from foreign exchange earnings.
The Ministry Of Finance also added that, “The uncertainty and general decline in global economic activities caused by the COVID-19 pandemic have further dimmed the prospect of reversing the downward trend in foreign portfolio investments (FPIs) in the Nigerian Treasury Bills (NTBs), also adversely impacted by the Covid-19 inspired flight to safety, represent the second biggest source of dollar inflow into the country after crude oil.”
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