In a recent interview with Channels Television, Senator Ndume, Leader of the Senate, addressed the issue of the continued depreciation of the naira against the dollar. According to him, this drop did not lead to losses for the government, but on the contrary constitutes an opportunity for the country to generate more revenue to finance the 2024 budget.
He pointed out that the Federal Government would have more naira available for expenditure as the value of the dollar continues to rise. With the dollar being the primary currency in which Nigeria’s crude oil exports are denominated, a significant portion of government revenue comes from these exports.
The Senator highlighted the fact that the 2024 budget is largely based on dollar revenues, as a significant part of state revenues comes from crude oil exports denominated in this currency.
He stressed: “Let us not forget that this budget is ‘dollarized’, particularly in terms of revenue. And as far as expenses are concerned, they are in naira. So if we receive our money in dollars and the value of the dollar is going up, that means we will have more naira in terms of what we spend, because we are not spending in dollars, we are spending in naira, while receiving our income in dollars.
Therefore, although the value of the naira against the dollar has fallen, Nigeria benefits from strong demand for crude oil, the country’s main export. This situation allows each dollar generated to be valued at the current exchange rate between the dollar and the naira.
Senator Ndume’s analysis highlights the complex dynamics between the exchange rate and government revenue, highlighting the need for Nigeria to leverage its oil exports to offset the depreciation of the naira in international markets.