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From Adanna Nnamani, Abuja
The Federal Government has said salary increases, minimum wage adjustments and wage awards introduced to cushion the impact of economic reforms have eroded the savings accruing from the removal of fuel subsidy.
Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, disclosed this on Wednesday in Abuja while presenting the government’s scorecard on the impact of the economic reforms introduced by the President Bola Tinubu administration.
Oyedele said the Federal Government’s share of the N15.8 trillion in resources generated from subsidy removal and related reforms between June 2023 and December 2025 amounted to N5.4 trillion, while N10.4 trillion went to state and local governments through the Federation Account.
He, however, said the Federal Government spent N9.39 trillion on wage adjustments, minimum wage increases and allowances for public servants during the period.
“The incremental amount that the Federal Government spent paying higher wages is more than the entire savings that the Federal Government earned from subsidy removal,” Oyedele said.
According to him, the N9.39 trillion spent on wage-related adjustments was part of the Federal Government’s total incremental expenditure of N30.64 trillion during the period.
He said the government’s incremental resources stood at N20.4 trillion, comprising its share of Federation Account revenues, incremental independent revenue and additional borrowing.
Oyedele explained that the subsidy savings did not appear as a separate item in Federation Account allocations because the savings were reflected through higher revenue collections following the reforms.
He said the reforms, particularly the removal of fuel subsidy and the unification of the foreign exchange market, increased revenue accruing to the Federation.
The minister said the additional resources were needed to meet higher government expenditure arising from wage adjustments and other obligations.
He disclosed that N9.37 trillion was also spent on external debt servicing during the period, while N6.5 trillion went into strategic infrastructure.
Oyedele said the reforms had come with significant costs but argued that they prevented an even worse economic crisis.
He said, without the reforms, at least 30 states could have been struggling to pay salaries, compared with the current situation where states were meeting their salary obligations.
The minister also said petrol, which currently sells for about N1,100 to N1,400 per litre, could have been trading at about N3,000 per litre on the black market if the subsidy regime had continued on its pre-2023 trajectory.
He acknowledged that the reforms had increased the cost of living for Nigerians, saying the government was not pretending that the measures were painless.
Oyedele said the government’s focus going forward was to translate the gains from the reforms into improved welfare through expanded cash transfers, agricultural interventions and better spending on areas that directly affect Nigerians.
