See more as LCCI faults FG’s exchange rate benchmark in 2025 budget

• The LCCI has described the Federal Government’s exchanged assumptions in the 2025 budget proposal as unrealistic
• The chamber also raised concerns about the debt servicing and inflation rate captured in the budget
• LCCI, therefore, urged the government to make policies that will enable businesses to thrive and improve the living conditions of Nigerians

The Lagos Chamber of Commerce and Industry (LCCI) has faulted the assumptions of an N1,400 exchange rate proposed by the Federal Government in the 2025 budget proposal.

The chamber also said that the inflation rate of 15.8% target set in the 2025 budget is not feasible

Lagos Chambers of Commerce believes the Budget 2025 exchange rate is not possible. Photo credit: Bloomberg/contributor
Source: Getty Images

This was disclosed in a statement issued by Chinyere Almona, the Director-General of LCCI, on Monday, November 18.

In the statement, LCCI said that the parameters as contained in the proposed budget are unattainable given the prevailing macroeconomic condition of the country.

It noted that the budget's assumption of an exchange rate of N1,400 is too fragile to work against the prevailing average of over N1,600/$ at both the official and parallel segments of the foreign exchange (forex) market.

Part of the statement reads:

“This appears to be unsustainable. The situation is further worsened with the projected deficit at N13.08 trillion and new borrowings of N9.22 trillion. “With Federal Government debt already at about N134 trillion as of June 2024, inflation reaching a new high of 33.88 per cent as of October and businesses burdened with a high Monetary Policy Rate at 27.25 per cent, the Federal Government has a narrow bridge to navigate choices of policy options.”

LCCI disagrees with Inflation rate

The LCCI further stated that with the 15.8% inflation rate in the proposed budget, the Federal Government did not consider the factors responsible for the soaring headline and food inflation

With inflation soaring to 33.88 per cent in October 2024, LCCI said it would be foolhardy for the Federal Government to believe a possible 51 per cent decline in inflation within one year.

The LCCI also challenged the 91.2% increase in debt services as proposed in the budget, describing it as unsustainable since the proposed increase of 91.2% to N15.38 trillion is equivalent to 32.1% of the total budget.

Report predicts naira exchange rate in 2025

In a related development, Legit.ng reported earlier that a data research company based in Abuja has predicted a new exchange rate for the naira against the dollar in 2025.

The company, in its macroeconomic outlook released to the public, said it expects the naira to hit N2,000 a dollar.

The naira is currently at its lowest levels and exchanges in the official and black markets above N1,680 against the US dollar.

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Source: Legit.ng