The President Bola Ahmed Tinubu-led administration has disclosed how the N15.8 trillion saved from fuel subsidy removal and other reforms was distributed, providing its most detailed account yet of the financial impact of the measures introduced over the past three years.
Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, disclosed the figures at a press conference monitored by NewDailyPrime on Wednesday.
According to Oyedele, the reforms resulted in N15.8 trillion in savings that accrued to the Federation Account and were subsequently shared among the Federal Government, state governments and local governments.
He explained that the Federal Government received N5.43 trillion from the savings, while the 36 states received N6.52 trillion and local governments received N3.88 trillion.
The minister stressed that the savings from the removal of the petrol subsidy did not represent a single pool of money controlled by the Federal Government.
Rather, he said the additional resources helped reduce the fiscal pressure that had previously been created by subsidy payments and lowered the amount of additional borrowing required to finance government expenditure.
“The Federal Government had approximately N20.4 trillion in incremental resources.
“Over the same period, additional expenditures amounted to approximately N30.64 trillion. Subsidy removal therefore did not create one large pool of cash available to the Federal Government. It reduced a major fiscal burden and the amount of additional borrowing that would otherwise have been required,” Oyedele said.
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Beyond the savings generated by the removal of the fuel subsidy, Oyedele said the reforms produced N3.12 trillion in other incremental revenues.
The government also recorded N11.85 trillion in incremental borrowing during the period under review.
Combined with the subsidy-related resources, the figures brought the Federal Government’s incremental resources to approximately N20.4 trillion.
However, the minister said the government’s additional expenditure during the same period was considerably higher, reaching approximately N30.64 trillion.
He explained that the difference reflected the significant financial pressures faced by the government, including wage adjustments, debt servicing, infrastructure spending and electricity subsidies.
According to the minister, N9.39 trillion of the additional expenditure went towards wage adjustments.
Another N9.37 trillion was used for servicing external debt, while N6.47 trillion was spent on infrastructure projects.
The government also spent N3.14 trillion on electricity subsidies during the period.
The figures provide an indication of how the administration’s additional resources were absorbed by rising government obligations and interventions.
Oyedele’s explanation also sought to address a recurring debate over the impact of fuel subsidy removal on government finances and whether the savings translated into a large cash surplus for the Federal Government.
The minister maintained that the reform should instead be viewed as a measure that removed a substantial fiscal burden and reduced the need for even greater borrowing.
President Tinubu announced the removal of the petrol subsidy shortly after taking office in May 2023, with the decision immediately triggering a sharp increase in petrol prices.
In June 2023, the administration also moved to liberalise the foreign exchange market, resulting in significant fluctuations in the value of the naira.
Both decisions formed the core of the administration’s early economic reform programme and were aimed at addressing longstanding fiscal and monetary distortions.
While the reforms have generated additional revenue and reduced some government obligations, they have also contributed to significant economic pressures on households and businesses, particularly through higher petrol prices, increased transportation costs and elevated living expenses.
The latest figures from the Finance Ministry are therefore likely to fuel further debate over the extent to which the financial gains from the reforms have translated into improved economic conditions for Nigerians.
The administration has continued to defend the reforms as necessary measures to stabilise the country’s finances and create the foundation for long-term economic growth, despite the considerable short-term difficulties associated with their implementation.
