Finance Minister says economic reforms came with difficult but necessary trade-offs as government responds to public concerns over subsidy savings.
The Federal Government has disclosed that it will soon publish details of how savings from the removal of fuel subsidy have been spent, amid growing public concerns over the impact of recent economic reforms.
Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, made the disclosure at the African Emerging Markets Forum in Abuja on Wednesday, stating that funds saved from fuel subsidy removal and foreign exchange market reforms have largely been utilised to offset higher debt-servicing costs and increased government expenditure.
According to him, fuel subsidies and implicit foreign exchange subsidies previously cost Nigeria about five per cent of its Gross Domestic Product before they were removed.
He explained that a significant portion of the savings had been absorbed by rising debt-servicing obligations, noting that borrowing costs increased from about eight per cent before the reforms to as much as 24 per cent afterwards.
The minister added that the Federal Government’s wage bill has nearly doubled following the increase in the national minimum wage to ₦70,000, while spending has also risen through the education loan programme currently supporting more than 1.5 million Nigerian students with tuition assistance and monthly stipends.
“I’ve heard this question so many times, and guess what? It’s a valid question,” he said in response to concerns about the utilisation of subsidy savings.
He maintained that the economic reforms were necessary despite their short-term effects on household incomes, stressing that temporary economic adjustments were inevitable following the removal of subsidies.
The minister also rejected recent assessments suggesting that the reforms have worsened poverty levels, noting that the government would measure economic progress through multidimensional poverty indicators, real per-capita income growth and income inequality rather than relying solely on headline GDP figures.
He assured Nigerians that the planned publication of the subsidy savings report would provide greater transparency on how the funds have been deployed since the implementation of the reforms.