The Federal Government has begun channelling the money saved from the removal of fuel and foreign exchange subsidies into debt obligations, higher salaries, student support and other pressing government responsibilities.

Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, disclosed this on Thursday at the ongoing 7th Africa Emerging Markets Forum in Abuja, while promising Nigerians a detailed account of how the savings have been utilised.

Oyedele said concerns over the management of the funds were legitimate, stressing that the Government had a responsibility to explain clearly how the savings were being spent.

According to him, the combined cost of the former fuel subsidy and what he described as the “subsidy on foreign exchange” was equivalent to about five per cent of Nigeria’s Gross Domestic Product.

He explained that although the reforms resulted in financial savings, their main purpose was to remove distortions and corruption that had characterised the system.

“But the money saving is also important. In a few days, you will see the detailed analysis because we believe that we owe a duty to explain what we do to the Nigerian people. That’s what transparency looks like,” he said.

Oyedele disclosed that part of the funds had gone towards settling the Government’s Ways and Means obligations, meeting increasing debt-servicing costs and implementing the new national minimum wage.

He explained that prior to the reforms, the Government depended significantly on money creation to fund expenditure, when interest rates were around eight per cent and the national minimum wage was ₦30,000.

“If you stop printing money, the spending doesn’t disappear. You need to finance the money you were printing before. That was part of where the savings went,” he said.

The fiscal policy expert added that the increase in interest rates had placed additional pressure on the Government’s debt-servicing obligations, with borrowing costs climbing as high as 24 per cent.

“Instead of paying eight per cent on our debt, we’re paying as high as 24 per cent. When you need to service debts, you don’t debate whether you need to pay. You pay, and you pay on time,” he added.

Oyedele further disclosed that the increase in the national minimum wage from ₦30,000 to ₦70,000 had nearly doubled the Federal Government’s wage bill.

He said the savings had also helped fund the Nigerian Education Loan Fund, NELFUND, through which more than 1.5 million students have received tuition assistance and monthly stipends.

According to him, the initiative has eased financial pressure on millions of families, allowing parents to redirect some of their resources towards businesses and other essential needs.

“We will provide a detailed explanation of how much we saved and how the money has been spent,” he assured.

Oyedele also explained why the Federal Government continues to borrow even after exceeding its revenue projections.

He said beating a revenue target did not necessarily eliminate the need for borrowing because Government expenditure contained in the budget could still be higher than the revenue generated.

“If you have a budget to spend 10 and your revenue target is six, you need to borrow four. If you eventually collect seven, you have exceeded your revenue target, but you still need to borrow three,” he said.

He maintained that borrowing was not automatically a problem, provided the funds were deployed into productive investments capable of generating returns greater than the cost of borrowing.

“We must add more value than the cost of every naira and every dollar that we borrow,” he said.