The Federal Government has outlined how funds saved from the removal of fuel and foreign exchange subsidies have been spent, saying the resources have been used to meet key national obligations.
Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, disclosed this on Thursday during the 7th Africa Emerging Markets Forum in Abuja.
According to Oyedele, the savings have been channelled into servicing government debts, paying workers’ salaries, implementing the new ₦70,000 national minimum wage, and funding the Nigerian Education Loan Fund (NELFUND).
He assured Nigerians that the government would soon publish a comprehensive report detailing the total amount saved from the subsidy reforms and how the funds have been allocated.
Oyedele acknowledged public concerns over the use of the savings, describing them as valid, and stressed that the government has a responsibility to remain transparent.
He explained that fuel and foreign exchange subsidies previously accounted for about five per cent of Nigeria’s Gross Domestic Product (GDP), adding that the reforms were introduced not only to save money but also to eliminate distortions and curb corruption.
Savings Used for Debt Servicing and Wage Obligations
Oyedele said part of the savings was used to settle the Federal Government’s Ways and Means obligations, meet rising debt servicing costs, and finance the implementation of the new minimum wage.
He noted that after the government stopped relying on money creation to finance expenditure, it had to source alternative funding to meet its financial commitments.
He also pointed out that rising interest rates have significantly increased the country’s debt servicing costs, with borrowing rates climbing from about 8 per cent to as high as 24 per cent.
According to him, the increase in the national minimum wage from ₦30,000 to ₦70,000 also substantially raised the government’s wage bill, making it necessary to utilise part of the subsidy savings.
Student Loans and Continued Borrowing
Oyedele further disclosed that the subsidy savings have supported the NELFUND programme, through which more than 1.5 million students have received tuition assistance and monthly stipends, easing the financial burden on many families.
He added that the initiative has enabled parents to redirect funds previously reserved for school fees to businesses and other household needs.
On why the government continues to borrow despite improved revenue generation, Oyedele explained that higher revenue does not eliminate the need for borrowing when government expenditure still exceeds total income.
He maintained that borrowing remains necessary to bridge budget deficits but stressed that such funds must be invested in projects that generate long-term economic value and benefits for the country.