The Lagos Chamber of Commerce and Industry (LCCI) has faulted some key parameters on which the 2025 national budget is being proposed.
The Chamber, in a statement issued by its Director General, Dr. Chinyere Almona, on Monday, described the assumption of an exchange rate of N1,400 in the budget as too fragile to work against the current average of over N1,600 to a dollar in both official and parallel markets.
It also argued that the assumption of a 15.8 per cent inflation rate in the proposed budget did not take into cognisance the unabating factors pushing up both the headline and food inflation.
The group believed that with inflation rising to 33.88 per cent as of October 2024, it was rather unrealistic for the federal government to have assumed a steep 51 percent crash within a year.
Still, on inflation, the group appealed to the government to reconsider the ‘apparently over-ambitious’ assumptions for the proposed budget since the current challenging economic conditions, it stated, are mostly fuelled by inflation and exchange rates.
The Chamber further queried the 91.2% increase in debt services proposed in the budget, describing it as unsustainable since the proposed increase by 91.2% to N15.38 trillion is equivalent to 32.1% of the total budget.
“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,” it stated
The group, therefore, urged the government to move beyond such assumptions and projections by creating an enabling environment for the private sector to thrive, adding that clarity of policy direction in the economy is critical to achieving the projected growth rate of our Gross Domestic Product (GDP) in 2025.
The Chamber also called on the Central Bank of Nigeria (CBN) to sustain its Ways and Means Advances to the Federal Government at a five per cent limit for the fiscal years 2024-2025.
“Non-oil revenues, such as taxes, customs duties, and surpluses from government agencies, are all subject to volatility in the economy. Current economic downturns, tense business environments, ongoing debates on tax policies, and shifts in consumer behaviour can impact non-oil revenue performance.
“In the face of current realities, we urge the government at all levels to be more proactive in respect of nature-induced casualties, climate change impacts, and damages caused by human activities. In recent months we have recorded massive destruction of lives and properties due to climate-related factors,” LCCI stated.
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