Tinubu Government Reveals Where Fuel Subsidy Savings Are Going

Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, has explained how the Federal Government has utilised funds saved from the removal of fuel and foreign exchange subsidies.

Speaking on Thursday at the 7th Africa Emerging Markets Forum in Abuja, Oyedele said the savings had been channelled toward meeting key government obligations, including debt servicing, salary payments, implementation of the new national minimum wage and the student loan programme.

He also disclosed that the Federal Government would soon publish a detailed report outlining the total savings generated from the subsidy reforms and how the funds have been spent.

According to Oyedele, Nigerians have every right to demand accountability over the use of the savings, stressing that transparency remains a key responsibility of government.

He noted that the combined cost of fuel subsidies and what he described as foreign exchange subsidies previously amounted to about five per cent of Nigeria’s Gross Domestic Product (GDP).

However, he said the decision to remove the subsidies was driven not only by the need to save public funds but also to eliminate economic distortions, inefficiencies and corruption associated with the system.

Oyedele explained that a significant portion of the savings had been used to settle the government’s Ways and Means obligations, service rising debt costs and finance major policy commitments.

He said the government had to find alternative funding sources after ending its reliance on money creation to finance expenditure.

According to him, the sharp increase in interest rates has also made debt servicing significantly more expensive, with borrowing costs rising from about eight per cent to as high as 24 per cent.

The fiscal policy expert further noted that implementing the new ₦70,000 national minimum wage had substantially increased the Federal Government’s wage bill, making the subsidy savings an important source of funding for the salary adjustment.

Oyedele added that part of the funds had also been invested in the Nigerian Education Loan Fund (NELFUND), which he said has provided tuition support and monthly stipends to more than 1.5 million students, easing the financial burden on many families.

He reiterated that the government would soon provide a comprehensive breakdown of the savings and expenditure to enhance public accountability.

Addressing concerns over continued government borrowing despite improved revenue generation, Oyedele explained that exceeding revenue targets does not eliminate the need for borrowing when total government expenditure still surpasses available income.

He said borrowing remains necessary whenever there is a budget deficit but stressed that such loans should be invested in projects capable of generating economic value and long-term benefits for the country.