A political economist, Pat Utomi, believes the local currency may soon exchange above N,1000 to a dollar if the Federal government does not take “dramatic” action on Nigeria’s fiscal and economic policies.
Utomi said Federal government’s excessive borrowing from the Central Bank of Nigeria (CBN), against what the law says and violating the Fiscal Responsibility Act, cannot but affect the exchange rate.
“If you continue to generate or create money without creating value, the consequence is inflation and exchange rate will be collapsing, and will just multiply,” he said in a programme monitored on Channels Television on Wednesday, January 4.
Nigeria’s inflation rate at the end of November 2022 was 21.47 per cent. At the official window of the foreign exchange market, one dollar exchanged for N450.03 on Wednesday January 4, 2023, while it went for over N700 at the parallel market.
The ICIR had reported that the wide gap between the official and the parallel market rates had served as a trigger of economic distress for both the public and private sectors.
Utomi said unless some tougher economic decisions are taken, excessive borrowing by the Federal government would spell doom for the economy.
“If we don’t do something dramatic, the effect of this 2023 budget is that the exchange rate will go past N1,000 to a dollar. That is the direct effect of this budget, and you are going to see inflation probably go up to 50 per cent if some new dramatic changes are not made,” the economist said.
Utomi, describing the budget as “weak”, argued it would lead to loss of jobs, inflation, and unimaginable economic hardship.
He described the economic policies of the President Muhamnadu Buhari administration as “not people-friendly” and “not economic growth- oriented.”
He blamed leadership at the centre and “dysfunctional” state governors for Nigeria’s economic woes, and suggested that one of the ways forward would be for the Federal government to “fix” the civil service.
Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.