Finance Minister says borrowing costs, new minimum wage and student loan scheme consumed much of the fiscal gains from economic reforms……
The Federal Government has announced plans to publish a detailed account of how funds saved from the removal of petrol subsidies have been allocated, following growing public concern over the impact of the policy and questions about the use of the proceeds.
Speaking on Wednesday at the African Emerging Markets Forum in Abuja, the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, said the savings generated by the fuel subsidy removal, alongside foreign exchange market reforms, have largely been absorbed by rising debt obligations and increased government expenditure.
According to Oyedele, Nigeria had been spending the equivalent of about five per cent of its Gross Domestic Product (GDP) on fuel subsidies and what he described as an implicit foreign exchange subsidy before the reforms were introduced.
He explained that while the government has recorded savings from ending those subsidies, higher borrowing costs have significantly reduced the fiscal benefits. Interest rates on government borrowing, he noted, have climbed from roughly eight per cent before the reforms to as high as 24 per cent.
The minister also pointed to a sharp increase in the government’s wage bill following the approval of the new national minimum wage of ₦70,000, describing it as another major area where additional public funds have been committed.
Beyond wages, Oyedele said more resources have been directed toward the government’s education loan programme, which currently provides tuition support and monthly stipends to more than 1.5 million Nigerian students.
Addressing public concerns over the fate of the subsidy savings, the minister acknowledged that many Nigerians have repeatedly asked for greater transparency.
“I’ve heard this question so many times, and guess what? It’s a valid question,” he said, adding that the government intends to make public a detailed breakdown of how the savings have been utilised.
Oyedele also responded to recent concerns raised by the International Monetary Fund (IMF), which suggested that despite reforms praised by investors, many Nigerians continue to face worsening poverty. He argued that a temporary decline in real household incomes was an unavoidable consequence of removing long-standing subsidies.
He maintained that the true impact of the government’s economic reforms should not be measured by GDP growth alone. Instead, he said, progress would be assessed using broader indicators, including multidimensional poverty, growth in real income per capita and changes in income inequality.
The planned publication of the subsidy spending details is expected to provide greater clarity on how the government has deployed resources generated from one of Nigeria’s most significant economic reforms in recent years.
