LCCI Reviews FG's 2025 Budget, Faults Exchange Rate, Inflation Benchmark

• The LCCI has described the federal government’s exchange 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 a 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 was not feasible.

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 contained in the proposed budget were unattainable given the country's prevailing macroeconomic condition, The Cable reports.

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.

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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 noted that the proposed 15.8% inflation rate in the 2025 budget failed to account for the factors driving the sharp increases in headline and food inflation.

With inflation reaching 33.88% in October 2024, the chamber described the assumption of a 51% decline within a year as unrealistic, Punch reports.

Additionally, it criticized the proposed 91.2% increase in debt servicing to N15.38 trillion, representing 32.1% of the total budget, as unsustainable.

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FG sets naira to dollar exchange rate target in 2025 budget, expert disagrees, gives reason

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.

Proofreading by Nkem Ikeke, journalist and copy editor at Legit.ng.

Source: Legit.ng