Subsidy savings absorbed by debt costs, higher spending, says Finance Minister
By Aboki Forex —
Nigeria's Finance Minister Taiwo Oyedele has said savings from the removal of fuel subsidies and foreign-exchange market reforms have largely been absorbed by higher debt-servicing costs and increased government spending.
The reforms, introduced in 2023 by President Bola Tinubu, eliminated subsidies that had cost about 5% of GDP. But they also led to higher borrowing costs, with interest rates rising to around 24% from about 8% before the reforms.
Where the gains went
Oyedele said government spending increased after the minimum wage was raised to 70,000 naira per month and through expanded funding for an education loan programme serving more than 1.5 million students.
He rejected a recent IMF assessment that millions of Nigerians remain in poverty despite the reforms. He argued that short-term declines in real incomes were unavoidable following subsidy removal.
New measures of progress
The government will instead monitor progress using multidimensional poverty, real per-capita income growth and income inequality, rather than GDP growth alone.
Exchange rate: US$1 = 1,363.70 naira.
What it means for Nigerians
For businesses and households, the minister's comments confirm that the fiscal headroom from reform is not translating into new spending power. Debt service and higher wages are eating the gains, while the naira exchange rate remains a key pressure point.