Zainab Ahmed: Ministry of Finance works with CBN to close exchange rate gap



Zainab Ahmed, Minister of Finance, Budget and National Planning, said the tax authority ministry is working with the Central Bank of Nigeria (CBN) to close the gap between official and unofficial exchange rates.

The national currency changes to N411 / $ on the official market segment and N570 / $ on the parallel market.

Many believe that the parallel market rate is a reflection of its true value.

TheCable had reported this vice-president Yemi Osinbajo asked the CBN to allow the naira to reflect market realities.

Osinbajo had said the exchange rate was artificially low and discouraged investors from importing foreign currency into the country.

In an interview with Bloomberg TV on Friday, Ahmed said the government was focusing on improving foreign exchange inflows.

She said that with the commissioning of the Dangote refinery in 2022, the country would be able to save around 30% of its current foreign exchange (forex) spending on imports.

She also said that the country would earn forex from the sale of petroleum products to foreign countries.

“It is our desire to be able to reduce the gap between the unofficial market rate and the official market rate. We are working with the central bank to do it, ”she said.

“Again, what we need to do is improve the sources of foreign exchange earnings. At present, the predominant source is oil and gas.

“When the oil and gas revenues don’t come as we expected or when we have huge expenses in terms of subsidies, we have the problem of supply which cannot meet the demand.

“As I explained earlier, with savings of up to 30% in foreign exchange spending with the removal of the need to buy PMS overseas, we will have more FX to meet demand. “

Speaking also on the soaring crude oil prices, Ahmed said: “The high price of oil means that we would be able to earn more income. At $ 85 a barrel, that’s well above the $ 40 a barrel we have on our 2021 fiscal projections. “

“But we also have the challenge of having to buy petroleum products for use in the country because we don’t have functioning refineries. So that reduces the income that we would otherwise have made. “

The Minister noted that while revenues were increasing, expenses were increasing at a much faster rate.

“So we have an income problem. And we strive to cut expenses by being able to limit agency spending to 50 percent of their revenue, ”she said.

She blamed Nigeria’s high debt service-to-revenue ratio on the country’s large expenditure base.

“Our debt service relative to overall revenues is high because we have a very large expenditure base,” she added.

“We have a large part of our budget dedicated to payroll, and the President had decided early in his administration that we were not going to disengage staff.

“So you have to pay salaries, you have to pay pensions. And also, we have to fund the other branches of government, which are the judiciary and the legislature. “

Given the Success of the country’s latest bond, the minister said the country may enter the foreign capital market again this year.

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