The House of Representatives yesterday rejected the Federal Government’s exchange rate of N305/dollar in this year’s budget, saying it would engender huge corruption, with the almost N500/dollar at the parallel market.
Members of the Green Chamber also queried the Executive on the domestic borrowing plan of the President Muhammadu Buhari administration, saying it will stifle funds that could have been made available to the real sector and small businesses to grow the economy and move the country out of recession.
Of the N2.321 trillion borrowing plan projected in the budget, N1.253 trillion is to be sourced from the domestic market.
The lawmakers, who spoke during an interactive session with members of the Executive with the committees on Finance, Appropriation, Aid Loans & Debt Management, Legislative Budget and Research and National Planning & Economic Development on the Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) also said the government was not doing much to reign in inflation which presently stands at 18.55 percent.
Members in the various committees at the meeting also accused the Federal Government of insufficient consultation with stakeholders, especially the National Assembly while developing the MTEF, adding that the parameters in the budget are different from that in the MTEF initially submitted to the National Assembly
But the Minster of Budget & National Planning , Senator Udo Udoma, said the government has a multi-facetted plan to move the country out of recession.
On inflation, he said: “ It is our objective to move towards a very low inflation environment because we need to move to a low inflation environment so as to have sustained and sustainable growth.
“We believe that, as the Central Bank had said, many of the things that were feeding into the inflation in 2016 is that once we can stabilise the exchange rate and other aspects of the economy, we will reduce the rate of inflation .
“But we need to do a lot more than that. We need to reduce the cost of doing business and we have a number of plans to achieve that. We need to get Nigerians back to work. We need to get single interest loans, particularly in the key areas, such as agriculture and all that, to get people back to work. Already the Central Bank is working on that.”
Udoma said the government was doing a lot, which it believes will restructure the economy. According to him, the difficult and challenging phase the country is passing through is seen on the part of the executive as an opportunity “to change things in a fundamental way”.
Finance Minister Kemi Adeosun said the government had put a lot of measures in place to stimulate the economy. She said people should be careful about putting their faith in the black market as it drives inflation.
“There is a number of structural initiative to close the gap. We have to look at why are people buying dollars at such high amounts. It’s driven by irrational and emotional factors.”
Adeosun said the Fundamentals show that the naira should be strengthening presently. “The black market will collapse because it’s not being driven by any fundamentals,” she said.
On Treasury Single Account (TSA), the minister said it was counter productive to put the government’s money in commercial banks only for them to loan it back to the government at higher rates.
Mrs. Adeosun said the government was spending more on infrastructure. “We’re targeted on spending on what will bring us out of the recession,” she said.
At the session were the Ministry of Finance, Budget and National Planning, Mines and Solid Minerals Development, Office of the Accountant General of the Federation, the Nigerian National Petroleum Corporation (NNPC), Nigerian Customs Service.
Others were Federal Inland Revenue Service (FIRS) and the Debt Management Office, Central Bank of Nigeria (CBN), and the Department of Petroleum Resources (DPR).