Nigeria Saves $20 Billion from Petrol Subsidy Removal and Forex Pricing Changes

Wale Edun, Nigeria's Minister of Finance and Coordinating Minister of the Economy, announced that the country has saved approximately $20 billion by removing petrol subsidies and implementing a market-based foreign exchange pricing system. He made this statement during an event in Abuja to commemorate the first 100 days of Esther Walso-Jack as the head of the civil service of the federation.

Edun highlighted that the combined cost of these subsidies had been a significant burden on the economy, accounting for about five percent of Nigeria's Gross Domestic Product (GDP). "An amount of five percent of GDP is what those two subsidies were costing when there was a subsidy on PMS [Premium Motor Spirit] and when there was a subsidy on foreign exchange," he explained. With Nigeria's GDP averaging around $400 billion, this translates to about $20 billion that could have been allocated to essential sectors.

The minister emphasized that the funds saved from these reforms are being redirected to critical areas such as infrastructure, health, education, and social services. He noted the positive impact of the government's measures, stating, "The real change that has happened with the measures of Mr. President is that nobody can wake up and their target for the day or for the week or the month or the year is to get access to cheap funding."

Edun further elaborated that the removal of these subsidies has curtailed opportunities for individuals to gain wealth without adding value, as they can no longer exploit the previous system of cheap funding from the central bank or the inefficient petrol subsidy regime.