The Federal Government of Nigeria has announced a $20 billion savings following the removal of the petrol subsidy and the adoption of market-driven foreign exchange pricing.
Wale Edun, the Minister of Finance and Coordinating Minister of the Economy, disclosed this during an event in Abuja marking the first 100 days in office of Esther Walso-Jack, the Head of the Civil Service of the Federation.
Edun revealed that the subsidies on petrol and foreign exchange had previously cost the nation approximately five percent of its Gross Domestic Product (GDP).
“When there was a subsidy on PMS [Premium Motor Spirit] and on foreign exchange, they collectively cost five percent of GDP. Assuming GDP was $400 billion on average, five percent of that is $20 billion—funds that could now go into infrastructure, health, social services, and education,” Edun explained.
The minister emphasized that the removal of these subsidies is redirecting resources into critical developmental areas. “The real change is that no one can wake up and target cheap funding or forex from the Central Bank to enrich themselves without adding value. Similarly, profiteering from the inefficient petrol subsidy regime is no longer possible,” he said.
This financial redirection, according to Edun, is part of broader efforts by the current administration to enhance the nation’s fiscal discipline and foster economic growth.
President Bola Tinubu officially ended the petrol subsidy regime on May 29, 2023, a move that has sparked debates across the nation. While some hail it as a necessary reform to redirect funds toward development, others criticize the immediate economic hardship it has imposed on citizens.
The Federal Government asserts that the savings will significantly contribute to improving infrastructure, healthcare, education, and other vital sectors, providing long-term benefits for Nigerians.
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