An associate professor of Taxation and Finance, Dr. Vincent Olusegun, has said that the exchange rate of N750 to a dollar that was written in the newly presented 2024 budget cannot be achieved unless the corruption in the government has been tackled.
Olusegun, while on an interview with ARISE NEWS on Thursday, said that the major driver of foreign exchange is corruption, alleging that about 50% of the budget is used for “padding,” that is, the ‘settlement’ of people who will want a cut of the budgetary allocation,
Giving his opinion on the budget that was presented by President Bola Ahmed Tinubu, the associate professor said, “Looking at the assumptions underlying the budget, from my own perspective, some of the assumptions, they are actually apt, while certain assumptions are really sceptical, I’m sceptical about achievements of those assumptions.
“Firstly, the exchange rate at 750, I am not too sure if the exchange rate at 750 is really achievable, because the real fundamentals that are determining the exchange rate and the fluctuations has not been addressed. And for me, if corruption has not been tackled in government circles, that exchange rate of 750 is not achievable. I will go into it briefly.
“Looking at the way the government operates and the way the government both at federal and sub-national, the way they’re structured, and the bind behaviour and the procurement procedure, you will discover that over time, about 50% of the budget, they really go into what we call padding. And what is padding? Padding is just adding money for the boys as part of the budget, and the currency for the negotiation of that is in dollars. Whatever that is being procured, just assume that 50% of that money is lost to corruption, is lost to settlement, and the currency for settlement is always in dollars.
“In whichever form, if the currency for settlement is dollars, this will impact highly on foreign exchange rate at the market because whoever is dealing with government will be looking for dollar here and there at sub-national and at the federal level.”
He, however, addressed other parts of the budget, saying, “The oil price benchmark, that is reasonable as far as I am concerned, considering the current price of the dollar at the international market. I believe that is quite attainable. And in terms of quantity, if government is continuing with the way it’s going now, trying to ensure that we wrap up production level, we clear up the bandits, and we are able to actually take charge of the production and chase the bad guys away, we can actually attain the production expectation.”
“In terms of inflation rate, it’s dicey, considering the current inflation rate of about 28% and looking at it trending down, it requires a lot of effort. It presupposes that we will be doing fine in agriculture, many people will go back to the farm and production level will rise. And of course, we will be able to import at quite reasonable rates because we are still very much import dependent in terms of basic food items that are needed in a typical household. So, it’s sceptical, but it’s equally quite achievable.”