The Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, addressed concerns regarding FAAC disbursement and its impact on the Naira’s depreciation.
He responded to questions from journalists at the World Bank/IMF summit in Washington D.C. regarding statements made by CBN Governor Yemi Cardoso.
Edun emphasized that the main issue affecting Nigeria’s foreign exchange market is supply.
- He highlighted that as an oil-producing nation, Nigeria could mitigate these pressures by significantly increasing oil production output.
- He stated, “The key about the foreign exchange market really is supply… we just need to get our oil production up, and that will deal with that issue of foreign exchange supply and pressure on foreign exchange anytime there are large flows.”
- The difference between the 2024 budget exchange rate of N800/$ and the prevailing rate has positively influenced FAAC allocations, significantly contributing to total disbursements.
- A study by Agora Policy found that from May 2023 to April 2024, exchange rate gains added N4.23 trillion to FAAC allocations, representing about 20% of the total disbursements in that timeframe.In comparison, exchange rate gains averaged only 1.32% of total FAAC allocations over the preceding four years.
