Lagos Chamber of Commerce Calls 2025 Budget Exchange Rate Assumptions ‘Unrealistic’
The Lagos Chamber of Commerce and Industry (LCCI) has criticized the federal government’s projection of an exchange rate of N1,400 to the dollar in the proposed 2025 budget, calling it unrealistic.
The Lagos Chamber of Commerce and Industry highlighted that the country’s current macroeconomic conditions, including high inflation and a fluctuating exchange rate, make such an assumption overly optimistic.
With inflation reaching 33.88% as of October 2024 and the exchange rate averaging above N1,600 in both official and parallel markets, Lagos Chamber of Commerce and Industry believes it is unlikely that these figures will improve dramatically in the short term.
Furthermore, the government has proposed a total expenditure of N47.9 trillion for 2025, a 36.64% increase from the previous year, but the Lagos Chamber of Commerce and Industry warns that these projections do not account for the challenges of managing such a high budget in the face of unstable economic indicators.
In addition to the unrealistic exchange rate assumption, the LCCI expressed concern over the government’s forecasted GDP growth rate of 4.6% for 2025, suggesting that achieving this target will require a clear policy direction and a conducive environment for the private sector to thrive. The chamber also pointed to the sharp increase in debt servicing, which is projected to rise by 91.2% to N15.38 trillion, representing over 32% of the total budget. This level of debt service, alongside the anticipated deficit of N13.08 trillion and new borrowings of N9.22 trillion, raises questions about the sustainability of the government’s fiscal strategy.
The LCCI called for the federal government to reconsider its over-ambitious budget assumptions, particularly in light of the country’s soaring inflation rate and volatile exchange rates. The chamber also recommended that the Central Bank of Nigeria (CBN) sustain its current Ways and Means Advances to the federal government at a 5% limit for the fiscal years 2024-2025, given the challenges posed by the country’s debt burden, high inflation, and restrictive monetary policies. Moreover, the LCCI urged the government to maintain fiscal discipline by adhering to the Fiscal Responsibility Act, which governs budget management and borrowing.
Finally, the LCCI emphasized the importance of addressing pressing national issues such as climate change, insecurity, and youth unemployment. The chamber recommended increased investment in key sectors like food production, power supply, and small and medium-sized enterprises (SMEs). It also stressed the need for coordinated monetary and fiscal policies to address the current economic downturn, reduce unemployment through skills acquisition, and empower businesses to drive growth. The LCCI concluded by calling on all levels of government to prioritize climate adaptation
