The Federal Government has explained how savings from the removal of petrol and foreign exchange subsidies have been spent, saying the funds were channelled into debt servicing, salary increases, student loans, and other key financial obligations aimed at stabilising the economy.
The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, made the disclosure on Thursday during the 7th Africa Emerging Markets Forum in Abuja, where he also promised to publish a detailed breakdown of the subsidy savings and how they have been utilised.
Responding to growing public concerns over the fate of the savings generated by the reforms, Oyedele acknowledged that Nigerians deserved a full account of how the funds had been spent.
He said the combined cost of petrol subsidy and what he described as the “subsidy on foreign exchange” previously consumed about five per cent of Nigeria’s Gross Domestic Product (GDP), noting that although the reforms generated substantial savings, their primary objective was to eliminate systemic distortions and corruption.
“But the money saving is also important. In a few days, you will see the detailed analysis because we believe that we owe a duty to explain what we do to the Nigerian people. That’s what transparency looks like,” he said.
According to him, a significant portion of the savings was used to clear the Federal Government’s Ways and Means obligations, meet rising debt servicing commitments, and finance the implementation of the new national minimum wage.
Oyedele explained that before the reforms, the government largely financed expenditure through money creation by the Central Bank, a practice that was no longer sustainable.
“If you stop printing money, the spending doesn’t disappear. You need to finance the money you were printing before. That was part of where the savings went,” he said.
He added that the sharp rise in interest rates had significantly increased Nigeria’s debt servicing burden, with borrowing costs climbing from about eight per cent to as high as 24 per cent.
“Instead of paying eight per cent on our debt, we’re paying as high as 24 per cent. When you need to service debts, you don’t debate whether you need to pay. You pay, and you pay on time,” he stated.
Oyedele further disclosed that part of the subsidy savings was used to fund the increase in the national minimum wage from N30,000 to N70,000, a move he said had almost doubled the Federal Government’s wage bill.
He also revealed that the funds had supported the Nigerian Education Loan Fund (NELFUND), through which more than 1.5 million students have received tuition support and monthly stipends.
According to him, the student loan programme has eased the financial burden on millions of Nigerian families by allowing parents to redirect resources to businesses and other essential needs.
“We will provide a detailed explanation of how much we saved and how the money has been spent,” he assured.
Why FG Is Still Borrowing
Oyedele also defended the Federal Government’s continued borrowing despite exceeding its revenue targets, explaining that higher-than-expected revenue does not automatically eliminate the need for loans.
He said borrowing remained necessary whenever government expenditure exceeded total revenue.
“If you have a budget to spend 10 and your revenue target is six, you need to borrow four. If you eventually collect seven, you have exceeded your revenue target, but you still need to borrow three,” he explained.
While acknowledging concerns about Nigeria’s rising debt profile, Oyedele argued that borrowing was not inherently problematic if the funds were invested in projects capable of generating greater economic value than their cost.
“We must add more value than the cost of every naira and every dollar that we borrow,” he said.
This version uses a stronger hard-news lead, places the subsidy savings at the centre of the story, and improves the flow while preserving all of Oyedele’s key quotes and explanations.
