FG Explains How Fuel Subsidy Savings Were Used
By OBI DAVIES
THE Federal Government has explained how it used the savings from the removal of fuel subsidy. It said rising debt repayments and higher public spending consumed most of the funds.
Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, spoke at the African Emerging Markets Forum in Abuja. He said the government would soon publish a detailed account of how the subsidy savings were spent.
According to him, fuel subsidy and the implicit foreign exchange subsidy previously cost Nigeria about five per cent of its Gross Domestic Product before the reforms.
Oyedele said debt servicing became significantly more expensive after the reforms. He noted that government borrowing costs rose from about eight per cent to as high as 24 per cent. He said this increase absorbed a large share of the available savings.
He also said the Federal Government’s wage bill increased sharply after the approval of the new ₦70,000 national minimum wage.
The minister added that more public funds now support the student loan programme. He said the scheme currently provides tuition and monthly stipends for more than 1.5 million Nigerian students.
Oyedele described public concerns over the subsidy savings as legitimate. He assured Nigerians that the government would provide a transparent breakdown of the spending.
He also disagreed with the International Monetary Fund’s assessment that poverty remained widespread despite the reforms. He argued that temporary income losses were expected during major economic adjustments.
The minister said the government would judge the success of the reforms through improvements in multidimensional poverty, real income growth and income distribution rather than GDP figures alone.
