By Emma Ujah, Abuja Bureau Chief
The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, has explained how the Federal Government is utilising savings from the removal of fuel and foreign exchange subsidies, saying the funds have been deployed to debt servicing, salary increases, student loans and other critical obligations.
Oyedele made the disclosure on Thursday at the ongoing 7th Africa Emerging Markets Forum in Abuja, where he also pledged to release a detailed breakdown of how the savings have been spent.
Responding to concerns over the utilisation of the subsidy savings, he described the question as legitimate and said the government owed Nigerians an explanation.
According to him, the combined cost of fuel subsidy and what he described as the “subsidy on foreign exchange” was about five per cent of Nigeria’s Gross Domestic Product (GDP).
He stressed that while the reforms generated savings, their primary objective was to eliminate distortions and corruption in the system.
“But the money saving is also important. In a few days, you will see the detailed analysis because we believe that we owe a duty to explain what we do to the Nigerian people. That’s what transparency looks like,” he said.
Oyedele said part of the savings had been used to offset the government’s Ways and Means obligations, service rising debt costs and fund the implementation of the new national minimum wage.
He noted that before the reforms, the government relied heavily on money creation to finance spending, while interest rates were around eight per cent and the national minimum wage stood at N30,000.
“If you stop printing money, the spending doesn’t disappear. You need to finance the money you were printing before. That was part of where the savings went,” he said.
He explained that higher interest rates had also increased the government’s debt servicing costs, with borrowing rates rising to as much as 24 per cent.
“Instead of paying eight per cent on our debt, we’re paying as high as 24 per cent. When you need to service debts, you don’t debate whether you need to pay. You pay, and you pay on time,” he added.
The fiscal policy expert also said the increase in the minimum wage from N30,000 to N70,000 had nearly doubled the Federal Government’s wage bill.
He further disclosed that the savings had supported the Nigerian Education Loan Fund (NELFUND), through which over 1.5 million students have received tuition support and monthly stipends.
According to him, the programme has reduced the financial burden on millions of households, enabling parents to channel resources to businesses and other essential needs.
“We will provide a detailed explanation of how much we saved and how the money has been spent,” he assured.
Why government still borrows
Oyedele also addressed concerns over the government’s continued borrowing despite surpassing its revenue targets.
He explained that exceeding revenue projections did not eliminate the need for borrowing because budgeted expenditure often remained higher than total revenue.
“If you have a budget to spend 10 and your revenue target is six, you need to borrow four. If you eventually collect seven, you have exceeded your revenue target, but you still need to borrow three,” he said.
He maintained that borrowing was not inherently problematic, provided the funds were invested productively.
“We must add more value than the cost of every naira and every dollar that we borrow,” he said.
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