Wage bill, other spending exceed subsidy savings — Oyedele
Federal Government Clarifies Economic Impact of Subsidy Removal
By Emma Ujah, Abuja Bureau Chief
ABUJA — The Federal Government has issued a statement regarding the N15.8 trillion saved from the removal of fuel subsidies and the floatation of the naira, emphasizing that these funds do not amount to an available cash reserve for governmental use.
Finance Minister Taiwo Oyedele presented the government’s economic reforms assessment on Wednesday in Abuja. He explained that the N15.8 trillion in estimated savings from subsidy removal was distributed among the Federal Government, states, local governments, and other statutory entities, with the Federal Government receiving only N5.43 trillion.
Oyedele stated that the government’s total incremental resources from June 2023 to December 2025 totaled approximately N20.4 trillion. This figure includes the N5.43 trillion from subsidy savings, N3.12 trillion in additional revenues, and N11.85 trillion in borrowing.
However, Oyedele noted that the government’s incremental expenditures during the same timeframe exceeded N30.64 trillion. He cited increased spending on wages, debt servicing, infrastructure development, electricity support, social programs, and various government commitments as key contributors to this rise in expenditure.
“The N15.8 trillion commonly described as subsidy savings was not retained by the Federal Government alone. It was shared across all tiers of government,” Oyedele said. “When factoring in the N3.12 trillion in additional revenues and N11.85 trillion in incremental borrowing, the Federal Government had approximately N20.4 trillion in incremental resources.”
He further clarified that the substantial costs incurred by the government during this period meant that the funds from subsidy removal were inadequate to meet its growing financial obligations.
“Over the same period, additional expenditures amounted to approximately N30.64 trillion. Therefore, subsidy removal did not create a significant cash reserve for the Federal Government,” Oyedele stated. “Instead, it alleviated a major fiscal burden and decreased the amount of additional borrowing required.”
The minister’s remarks address a common perception that the elimination of the petrol subsidy has released substantial financial resources for the government. Oyedele emphasized that the reform should be viewed as a measure that alleviated pressure on public finances while simultaneously highlighting the ongoing need for borrowing due to competing expenditure demands, including personnel costs and infrastructure investments.
