According to the draft 2021-2023 Medium Term Expenditure Framework/Fiscal Strategy Paper, (MTEF/FSP) presented by Minister of Finance, Budget & National Planning, Zainab Ahmed during a virtual consultative public forum in Abuja, the exchange rate of Naira against the dollar is projected to remain unchanged between 2020 – 2023.
According to the MTEF/FSP projection, the exchange rate is to be fixed at N360.00 per dollar from 2020 to 2023.
Table 1: Extract from 2021 – 2023 MTEF/FSP
In March, following the crash in oil prices which greatly affected the supply of foreign exchange to the economy, the Central Bank of Nigeria “technically”devalued naira saying that “market fundamentals do not support Naira devaluation at this time.”
The adjustment saw the rate at the Investors’ & Exporters’ FX Window move from N360/$1 to N380/$1 while the official exchange rate moved from N305/$1 to N360/$1,
Nigeria maintains multiple exchange rates which includes the CBN official rate, the BDC rates, SMIS , and the NAFEX (I&E window).
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In recent weeks, there has been reports that the Central Bank of Nigeria (CBN) adjusted the official exchange rate from N360/$1 to N380/$1 as it is working towards unification of the Exchange rate
However, at the FMDQ the official rate is quoted as N381/$1 whereas at the CBN website it remains unchanged at N360/$1.
Also, in the MTEF/FSP report, the oil price Benchmark for 2021, 2022 and 2023 budgets are projected to be at $40 per barrel.
In the revised 2020 budget, which has been signed into law by President Buhari, oil price bench mark was revised downwards to $28 per barrel from initial stipulation of $57 per barrel.
Nevertheless, the actual average price of Nigerian crude for the period of Jan – May 2020 was $38.64 per barrel. While the average production, exclusive of production for repayment of cash call arrears was 1.88 million barrels per day.
With the exchange rate being projected to be pegged at N360/$1 until 2023, it remains unclear if the CBN had actually changed the official rate as quoted at the FMDQ and reported by several medias.
Written by;
Ifunanya Ikueze
