Nigeria to Publish Subsidy Savings Breakdown as Debt Costs Absorb Fiscal Windfall

ABUJA — Nigeria’s government will release an itemised breakdown of how savings from the removal of fuel and foreign-exchange subsidies have been deployed, Finance Minister Taiwo Oyedele said Thursday, as pressure mounts over the fiscal impact of reforms that have driven up living costs for millions.

Speaking at the 7th Africa Emerging Markets Forum in Abuja, Oyedele said the combined effect of ending the two subsidies represented roughly 5% of gross domestic product. The savings, however, were not set aside. “Saving money was not the primary objective. It was eliminating the distortion and the corruption in the system, which is more fundamental,” he said.

He promised Nigerians would see the detailed analysis “in a few days,” adding, “We believe that we owe a duty to explain what we do to the Nigerian people. That’s what transparency looks like.”

**Debt Servicing and Wage Bill**

Oyedele explained that the reforms triggered higher inflation, driving the central bank’s benchmark interest rate from about 8% before the changes to as high as 24%. That sharply increased the government’s borrowing costs. “When you need to service debts, you do not debate whether you need to pay. You cannot negotiate it. You pay, and you pay on time,” he said.

Part of the savings also went toward financing a new national minimum wage, which was doubled to 70,000 naira ($51) per month from 30,000 naira, nearly doubling the federal wage bill. The government expanded the Nigerian Education Loan Fund (NELFUND), which now provides tuition support and monthly stipends to more than 1.5 million students, according to the minister.

Oyedele argued that before the reforms the government financed spending by printing money, fuelling inflation. Once that practice stopped, alternative revenue was needed to bridge the gap.

**Continued Borrowing Despite Revenue Gains**

The minister defended the government’s ongoing borrowing, saying stronger revenue collection does not eliminate financing needs when expenditure outstrips income. “If you have a budget to spend 10 and you have a target of revenue of six, you need to borrow four. If you collect revenue of seven, you have exceeded your revenue target, but it doesn’t change the fact that you still need to borrow three,” he said.

Oyedele added that future borrowing would be tied strictly to value-accretive, productive investments.

The fiscal arithmetic is central to Nigeria’s emerging debt market. Higher debt-servicing costs absorb a growing share of revenue, limiting the government’s ability to invest in infrastructure or social programmes beyond the minimum wage and student loan schemes.

**Labour Rejects Explanations**

Organised labour swiftly dismissed the minister’s statements. Olowoyo Gbenga, general secretary of the Nigeria Civil Service Union and national secretary of the Joint National Public Service Negotiating Council (Trade Union Side), attributed the policy confusion to overlapping fiscal frameworks, including the simultaneous execution of the 2024, 2025 and 2026 budgets, according to BusinessDay.

Gbenga questioned why subsidy savings were being used to cover personnel costs already appropriated in annual budgets. He said public sector workers had not yet received the 40% peculiar allowance linked to the new minimum wage framework, despite administrative directives for implementation from May 1, 2026, alongside outstanding wage awards.

A senior official of the Nigeria Labour Congress urged the Ministry of Finance to publish empirical, verifiable data covering all subsidy receipts since May 2023, according to BusinessDay. The official said reliance on broad macroeconomic assertions undermined public confidence.

**World Bank Concern Over Living Conditions**

At the same forum, World Bank Group Chief Economist Indermit Gill said many Nigerians remained unconvinced that the reform gains had translated into better living standards, according to Economic Confidential. Gill noted that while the government had increased revenues and narrowed the fiscal deficit, “it’s not clear to people whether savings and the additional resources have been spent.”

Gill said the Central Bank of Nigeria had done “a superb job” in reducing inflation from above 30% to below 15%, but stressed that further progress required stronger fiscal support.

Oyedele rejected a recent IMF assessment that millions of Nigerians remained in poverty despite the reforms, arguing that a temporary decline in real incomes was inevitable after subsidy removal, according to Reuters. He said the government would track progress through multidimensional poverty, real per-capita income growth and income inequality, rather than headline GDP growth alone.

A CBN study presented at the forum found that food price volatility and inflation are mutually reinforcing across many Sub-Saharan African countries, limiting the effectiveness of conventional monetary policy in fragile economies. The bank’s Director of Statistics, Dr. Okpanachi Moses, said conflict-affected nations should apply interest rate policies cautiously and focus on restoring food systems.

Oyedele reiterated that the primary goal of the reforms was to reset an economy weakened by structural distortions. “The reform itself was a reset. We were living in fiscal illusions. So, we needed to stop deceiving ourselves so the country can move forward,” he said.