Ministries, Departments, and Agencies (MDAs) with foreign earnings are to surrender 50 per cent of their foreign currency revenues to the federal government to raise resources to fund the government’s fiscal deficit in 2025.
The new policy is likely to pressure the financing structure of MDAs in 2025 as the 50 per cent revenue remittance to the government is being taken from gross, which could strain finances badly in some instances.
Sources at the Federal Ministry of Finance told InsideBusinessNG that the government leaves room for a net off and possible refund in foreign exchange revenues of MDAs at the end of the year.
“They are to detail all their expenditures at the end of the year to show if 50 per cent of their naira and dollar earnings are below their operational costs”, stated the source who noted that the MDAs are strained.
A good part of the funds for fiscal deficit financing is also expected to come from monetising the exchange difference to get more naira per dollar earned.
The 2025 budget is benchmarked at N1,500 to the dollar, a clear N650 ahead of the 2024 budget’s exchange rate of N850 per dollar, but the source noted the Central Bank of Nigeria (CBN) is monitoring up to the region of N1,655 meaning an additional N155 per dollar above the budget mark.
By the 2024 close, he also disclosed that all the foreign currency earnings in the federation account may have been monetised at N1,530 to the dollar, stating it would be complemented by the proceeds from the tax reform in the work to secure a means of financing the 2025 budget deficit.
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