Nigeria says subsidy savings absorbed by debt costs, higher spending

 

ABUJA, July 30  - Nigeria's finance minister said on Thursday that savings from the removal of fuel subsidies and ​foreign-exchange market reforms had largely been absorbed by higher ‌debt-servicing costs and increased government spending, as officials sought to defend reforms blamed for worsening living conditions.

President Bola Tinubu's 2023 reforms won backing ​from investors and international lenders, but drove up living ​costs for millions of Nigerians, raising scrutiny of how ⁠the resulting savings have been used.

At the African Emerging ​Markets Forum in Abuja, Finance Minister Taiwo Oyedele said fuel ​subsidies and what he described as an implicit foreign-exchange subsidy had cost Nigeria roughly 5% of GDP before their removal.

Oyedele said part of ​the savings had been absorbed by higher debt-servicing costs, with ​borrowing rates rising to as much as 24% from around 8% before ‌the ⁠reforms.

He said the government's wage bill nearly doubled after the minimum wage was more than doubled to 70,000 naira ($51) a month.

The government has also increased spending on an education loan ​programme that ​provides tuition support ⁠and monthly stipends to more than 1.5 million students, he said.

Oyedele rejected a recent IMF assessment ​that millions of Nigerians remained in poverty ​despite reforms ⁠welcomed by investors, arguing that a temporary decline in real incomes was inevitable after subsidy removal.

He said the government would ⁠track progress ​through multidimensional poverty, real per-capita income ​growth, and income inequality, rather than by headline GDP growth alone.

($1 = 1,363.7000 naira)