The Lagos Chamber of Commerce and Industry (LCCI) has expressed concerns over the proposed N1,400 foreign exchange rate (FX) projection in Nigeria's 2025 budget, deeming it unrealistic.
Chinyere Almona, the Director-General of LCCI, highlighted that the current average exchange rate exceeds N1,600 to a dollar in both official and parallel markets.
She emphasized that the assumption of a steep drop in the exchange rate is fragile, especially given the inflation rate, which surged to 33.88% as of October 2024. Almona stated, "Assuming an inflation rate at 15.8 percent does not reflect the unabating factors pushing up both the headline and food inflation."
The LCCI urged the federal government to reassess the assumptions underpinning the 2025 budget due to these economic challenges. The proposed budget includes a crude oil price benchmark of $75 per barrel and an oil production target of 2.06 million barrels per day.
However, Almona pointed out that the budget's parameters are overly optimistic in light of current economic realities. She further noted that the budget proposes a major increase in government expenditure, with plans to spend N47.9 trillion in 2025, marking a 36.64% rise from N35.06 trillion in 2024.
Additionally, the LCCI warned about the unsustainable nature of the projected debt services, which are set to increase by 91.2% to N15.38 trillion, accounting for 32.1% of the total budget. The projected deficit stands at N13.08 trillion, with new borrowings of N9.22 trillion.
Almona advised the government to maintain fiscal discipline and adhere to the Fiscal Responsibility Act in budget management and borrowing. She also stressed the importance of creating an enabling environment for the private sector and ensuring clarity in policy direction to achieve the projected GDP growth rate for 2025.
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