30 months after subsidy removal, FG spends N30.6tn, saves N15.8tn

In the 30 months following President Bola Tinubu's removal of the petrol subsidy and other significant economic reforms, Nigeria's Federal Government has spent N30.64 trillion on expenditures aimed at easing the impact of these policies. Concurrently, these reforms generated N15.8 trillion in savings for the Federation.

The government's total incremental expenditure between June 2023 and December 2025 surpassed the N20.4 trillion in additional resources available from subsidy savings, increased revenue, and borrowing by N10.24 trillion, or 50.2 percent. This indicates that while the removal of the petrol subsidy created substantial fiscal space, it did not result in a pool of readily available cash. Instead, these resources were absorbed by rising wage costs, debt servicing, infrastructure spending, and other obligations stemming from the economic reforms.

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Many people will say, ‘Where is the subsidy saving?’ As a matter of fact, there wasn’t any line in the Federation Account with the description, ‘subsidy savings.’

Finance Minister and Coordinating Minister of the Economy, Taiwo Oyedele, clarified that the N15.8 trillion was not directly deposited as "subsidy savings" in the Federation Account. Rather, the combined effect of the petrol subsidy removal and foreign exchange reforms increased the naira value of revenues accruing to the Federation. For instance, the naira value of import duties collected by Customs significantly rose as the exchange rate depreciated.

Oyedele explained that the savings manifested as higher revenue collections. The additional fiscal resources were not solely a product of petrol subsidy removal but also benefited from the unification of the foreign exchange market. The government received N5.4 trillion (34 percent) of the subsidy savings, while states received N6.5 trillion and local governments N3.9 trillion, distributed according to the Federation Account allocation formula. These details were presented in the Federal Government's Nigeria Reform Scorecard.

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So, the savings showed up in the Federation accounts by way of higher revenue collections as a result of the reforms.