According to Wale Edun, Minister of Finance and Coordinating Minister for Economic Affairs, the Federal Government of Nigeria has saved about $20 billion by eliminating petroleum subsidies and moving to a market-oriented foreign exchange system. . Edun disclosed this during a ceremony marking the first 100 days in office of Esther Walalso-Jack, the newly appointed Director of the Federal Civil Service.
The elimination of petroleum subsidies, a policy announced by President Bola Tinubu on May 29, marks an important step in addressing long-term fiscal challenges. Edun explains that subsidies for High-end engine spirit (PMS) and the previous foreign exchange regime consumed about 5% of Nigeria’s Gross Domestic Product (GDP) annually. “If we estimate GDP at $400 billion then 5% would amount to $20 billion – capital that could now be redirected to infrastructure, healthcare, social services and education.,” Edun noted.
While the financial savings are significant, the policy also faces challenges, including sharp increases in fuel prices that have strained household budgets. Edun acknowledged these difficulties but emphasized that the reforms had significantly reduced inefficiency and curbed corruption. “No one can wake up and target cheap financing or foreign exchange from central banks for personal gain without adding value,” he commented, emphasizing the government’s commitment to eliminating profiteering practices.
Public reaction to these reforms was mixed. On social media, some users praised the government’s recognition of the imposed economic stress subsidies, while others questioned the transparency and distribution of savings. Skepticism is growing after the government recently approved a $2.2 billion loan for the 2024 budget despite claims of significant savings.
Edun emphasized that the reforms under the leadership of President Tinubu are aimed at stabilizing Nigeria’s finances and eliminating avenues for profiteering from inefficient subsidy systems. “Profiteering from the fuel price subsidy regime is no longer feasibleHe said, reiterating the government’s intention to channel savings into development projects.
However, critics say the impact of these savings is yet to reach ordinary Nigerians. Many people are struggling with higher living costs, while promises to improve infrastructure and public services still need to be made public.
Adding to the controversy, the Nigerian National Petroleum Company (NNPC) Limited revealed in August that the government owed N7.8 trillion for unrecoveries, contradicting previous assurances that there was no subsidy. Which level is reapplied? This revelation has raised more questions about the clarity and implementation of the government’s economic policies.
As Nigeria implements these sweeping reforms, the government faces increasing pressure to ensure that the benefits of its policies translate into tangible improvements for the people of the country.
