The Federal Government has clarified that the ₦15.8 trillion estimated savings from fuel subsidy removal and the flotation of the naira between June 2023 and December 2025 did not translate into a large pool of cash available for the government to spend.
The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, made the clarification on Wednesday while presenting the government’s economic reforms scorecard in Abuja.
Oyedele explained that the ₦15.8 trillion in estimated subsidy savings was shared among the Federal Government, state governments, local governments and other statutory beneficiaries.
The Federal Government received an estimated ₦5.43 trillion from the savings.
According to the minister, the Federal Government’s total incremental resources during the period amounted to approximately ₦20.4 trillion. This comprised:
- ₦5.43 trillion from its share of subsidy savings
- ₦3.12 trillion in additional incremental revenues
- ₦11.85 trillion in additional borrowing
However, Oyedele said the government’s incremental expenditure during the same period was considerably higher, reaching approximately ₦30.64 trillion.
He listed additional spending on wages, debt servicing, infrastructure, electricity support, social programmes and other government obligations among the major areas responsible for the higher expenditure.
Oyedele said the figures should therefore be understood as a financing story rather than simply a savings story.
He stressed that the ₦15.8 trillion commonly described as subsidy savings was not retained by the Federal Government because it was distributed across the different tiers of government.
“The Federal Government’s estimated share was N5.43 trillion. When combined with N3.12 trillion in other incremental revenues and N11.85 trillion in incremental borrowing, the Federal Government had approximately N20.4 trillion in incremental resources,” he said.
The minister noted that the government’s additional expenditure of ₦30.64 trillion exceeded its incremental resources, meaning the subsidy savings alone could not meet its increased financial obligations.
“Subsidy removal therefore did not create one large pool of cash available to the Federal Government,” Oyedele said.
Instead, he explained that the reform reduced a major fiscal burden and lowered the amount of additional borrowing that would otherwise have been required.
The clarification comes amid widespread perceptions that the removal of the petrol subsidy freed up a huge amount of money for the Federal Government to spend.
Oyedele said the reform should rather be viewed as a measure that eased pressure on public finances and reduced the government’s borrowing requirements.
He maintained that the government’s fiscal position remains constrained by competing expenditure demands, including personnel costs, debt obligations, infrastructure investments and social programmes.
