A political economist, Prof Pat Utomi says the exchange rate of the naira to the dollar may go above $1 to N1,000 if some “dramatic” measures are not taken by the Federal Government on Nigeria’s fiscal and economic policies.
Utomi said this on Wednesday while speaking on Politics Today, a Channels Television programme.
The Labour Party (LP) chieftain said the ways and means funding option of the Federal Government through the Central Bank of Nigeria (CBN) has become a routine violation of fiscal responsibility laws.
“If you continue to generate or create money without creating value, the consequence is inflation and exchange rate will be collapsing, and will just multiply,” Utomi said.
Utomi’s remark comes hours after President Muhammadu Buhari signed the 2023 appropriation bill of N21.83 trillion into law. It is the eighth and final annual budget of the incumbent administration.
“What is the goal of the Buhari administration? It says it wants to create 10 million jobs in 10 years or something. This budget — will it create one job? No. It will lead to loss of jobs, it will lead to massive inflation, it will lead to a collapse in the exchange rate,” Utomi said.
“Let me explain why, it’s very simple. This is a budget of debt service. You are going to have revenues of what — nine trillion? You are projecting expenditure of what — 21 trillion. You are already in an unsustainable debt situation.
“Tell anybody who understands economics what this means. This is going to mean serious inflation.
“If you were in a situation where people are rushing to invest in Nigeria, you would say revenues that flow in would accelerate production and when you ask people who manage the economy, they say to you — you see the problem is not that our debt situation is not unsustainable, the problem is that of collecting revenue.
“God forbid, if we don’t do something dramatic, the effect of this budget is that the exchange rate will go past N1000, that is a direct effect of this budget. You are going to see inflation probably go up to 50 percent.”
Utomi, an ally of Labour Party (LP) 2023 presidential candidate, Peter Obi said the 2023 “weak budget” will lead to loss of jobs, inflation, and unimaginable economic hardship.
He described the economic policies of the Buhari administration as “not people-friendly” and “not economic-growth oriented”.
He blamed leadership at the centre and dysfunctional state governors for Nigeria’s economic woes and insisted that one of the way forward is for the Federal Government controlled by the All Progressives Congress (APC) to fix the civil service.
