Nigeria’s landmark petrol subsidy and foreign-exchange reforms generated N15.8 trillion in additional resources for the federation in the 30 months through December 2025, but much of the fiscal space was quickly absorbed by higher wages, debt costs and infrastructure spending.
The figures, released Wednesday by Taiwo Oyedele, minister of Finance and Coordinating Minister of the Economy in Abuja, offer the clearest accounting yet of where the financial gains from President Bola Tinubu’s reforms have gone.
The federal government alone recorded N30.64 trillion in incremental expenditure between June 2023 and December 2025, according to Oyedele. Wage adjustments, minimum-wage increases and allowances for public workers accounted for N9.39 trillion, almost matching the N9.37 trillion spent servicing external debt.
A further N6.5 trillion went into strategic infrastructure, leaving the government with a spending bill substantially larger than the new resources generated by the reforms.
‘The incremental expenses of the federal government alone, not the federation, were N30.64 trillion,’ Oyedele said while presenting the government’s Nigeria Reform Scorecard.
The numbers highlight the difficult fiscal trade-off facing Tinubu’s administration after it ended a petrol subsidy that had kept pump prices artificially low and loosened controls on the naira. While those policies increased the government’s financial room, they also exposed the budget to higher costs, particularly as the naira weakened sharply.
The N15.8 trillion in additional resources attributed to the reforms accrued to the federation rather than solely to Abuja. Of that amount, N5.4 trillion went to the federal government, while N10.4 trillion was distributed to states and local governments through the Federation Account.
Oyedele said the savings did not appear as a discrete line item labelled ‘subsidy savings.’ Instead, they showed up through higher naira revenues generated by the reforms, including the effect of the weaker exchange rate on customs collections and other federally collected taxes.
The federal government supplemented its N5.4 trillion share with N3.1 trillion in incremental independent revenue, largely from remittances and surpluses generated by government-owned entities. It also raised N11.9 trillion through additional borrowing, taking its total incremental resources during the period to N20.4 trillion.
Borrowing therefore supplied about 58 percent of the new resources, while subsidy and foreign-exchange reforms accounted for 27 percent, with the remaining 15 percent coming from other revenue.
Oyedele said the borrowing would have been considerably larger without the fiscal room created by the reforms.
‘The incremental amount that the federal government spends paying higher wages is more than the entire savings that the federal government earned from subsidy removal,’ he said.
That comparison underscores how quickly the reform gains have been overtaken by recurring government obligations. Although the federal government mobilised N20.4 trillion in additional resources, it incurred N30.64 trillion in incremental expenses. About two-thirds of the spending was funded from the new resources, while roughly N10 trillion came from the government’s existing revenue base.
Debt costs have also been amplified by the naira’s depreciation. Nigeria’s external obligations are denominated largely in foreign currency, meaning the dollar value of the debt does not necessarily change when the naira falls, but the amount of naira required to meet those obligations rises.
‘If we’re paying $1 million before interest on our foreign debts, it is still the same $1 million, but instead of 460 Naira, it’s now 1,415,’ Oyedele said.
The minister defended the government’s decision to continue servicing the debt despite the pressure on public finances, saying missed payments could trigger wider economic consequences.
‘When you have debt service to pay, you don’t negotiate. You don’t delay. You pay. Because delay or default has consequences,’ he said.
The government’s scorecard seeks to make the case that the reforms should not be judged solely by the additional revenue they generated. Oyedele said the primary objective was to dismantle distortions in the petrol subsidy and foreign-exchange markets, which he argued had created opportunities for corruption and rent-seeking.
The assessment compares Nigeria’s economic position before the reforms with its current position and a counterfactual estimate of what might have happened had the old policies remained. It examines 25 indicators covering fiscal sustainability, external stability, investment, social outcomes, growth and productivity.
The adjustment has nonetheless come at a steep cost for households and businesses. Petrol, which sold for about N185 a litre before the subsidy was removed, now costs roughly N1,100 to N1,400 in many parts of the country. The central bank’s monetary policy rate has also climbed from 18.5 percent to 26.5 percent, increasing borrowing costs across the economy.
‘Petrol at the pump has risen from roughly 185 Naira a litre to between 1,100 and 1,400. That is a major cost,’ Oyedele said.
He argued that the alternative could have been worse, with shortages and a much higher black-market price for petrol if the old subsidy regime had remained in place.
The government acknowledges that improved fiscal and external stability have yet to translate fully into better living standards. Inflation, food prices, and household purchasing power remain major pressure points, making the social payoff from the reforms a work in progress.