The government has made a N713.1bn revenue windfall from the devaluation of the naira, an analysis of the government’s earnings has shown.
The devaluation of the naira in June was meant to boost the country’s foreign exchange earnings and revenue in the process. So far, the Federal Account has been boosted by N713.1bn in exchange for difference earnings between June and September 2023.
The figure for the Federation Account was extracted from the monthly communiqué of the Federation Account Allocation Committee for the period under review.
In June, exchange difference revenue and rate differential was N147.07bn. In July, N39bn was exchange gain.
N283.91bn was from exchange gain in August. For September, the communique read in parts, “A communique issued by the FAAC at its October 2023 meeting indicated that the N903.48bn total distributable revenue comprised distributable statutory revenue of N423.01bn, distributable Value Added Tax revenue of N 282.67bn, Electronic Money Transfer Levy revenue of N10.99bn and Exchange Difference revenue of N 186.81bn.”
The Central Bank of Nigeria asked Deposit Money Banks to remove the rate cap on the naira at the official Investors and Exporters’ Window of the foreign exchange market to enable its free float against the dollar and other global currencies on June 14, 2023.
This has since led to the decline of the Naira. The local currency has fallen from its N471/$ to N809.02 /$ as of Monday at the Investors & Exporters FX window, according to data from the FMDQ Exchange. It has since fallen to N1, 030 at the parallel market.
This unification has bumped up revenue from exchange differences.
Recently, JP Morgan noted that a weaker exchange rate will mean increased revenue from oil and gas exports. The bank said, “Of course, a weaker exchange rate means the government would receive higher naira revenues from oil and gas exports.”