The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, has explained that savings from the removal of fuel and foreign exchange subsidies have been used to service debt, fund salary increases, support student loans and meet other key government obligations.
Speaking on Thursday at the 7th Africa Emerging Markets Forum in Abuja, Oyedele acknowledged public concerns over the use of the subsidy savings, describing them as legitimate. He said the Federal Government would soon release a detailed breakdown of how the funds had been spent, adding that transparency was a responsibility owed to Nigerians.
According to him, the combined cost of fuel subsidy and what he described as the “subsidy on foreign exchange” amounted to about five per cent of Nigeria’s Gross Domestic Product (GDP). While the reforms generated financial savings, he said their primary objective was to eliminate distortions and corruption in the system.
Oyedele disclosed that part of the savings had been used to clear the government’s Ways and Means obligations, meet rising debt servicing costs and finance the implementation of the new national minimum wage. He explained that before the reforms, the government relied heavily on money creation to fund expenditure, but ending that practice required alternative financing.
He also noted that rising interest rates had significantly increased the government’s debt servicing costs, with borrowing rates climbing from about eight per cent to as high as 24 per cent. In addition, he said the increase in the national minimum wage from ₦30,000 to ₦70,000 had almost doubled the Federal Government’s wage bill.
Oyedele further revealed that the savings had supported the Nigerian Education Loan Fund (NELFUND), through which more than 1.5 million students have received tuition funding and monthly stipends, helping to ease financial pressure on households.
Addressing concerns about the government’s continued borrowing despite improved revenue performance, Oyedele explained that surpassing revenue targets does not eliminate the need for borrowing when total expenditure exceeds available revenue. He maintained that borrowing is acceptable as long as the funds are invested in projects that generate value greater than their cost.