THE finance minister’s claim of saving $20 billion from subsidy has been called to question as the federal government has resorted to recent borrowing N1.77trillion ($2.2 billion)for 2024 budget.
The minister of dinance and the coordinating minister of the economy, Wale Edun, has said that Tinubu’s reforms in removing fuel subsidy, floating the Naira has saved Nigeria $20 billion.
This claim is in spite of economic difficulties currently ravaging the larger population of the country as revealed by the National Bureau of Statistics that households are now struggling to eat food in Nigeria.
Aside the current economic hardship faced by most Nigerians, Nigeria is currently spending $3.5 billion to service other outstanding debts.
Edun, disclosed that the full implementation of the key reforms of market-based pricing of premium motor spirit (PMS) and market-based pricing of exchange rate by the federal government saved about $20 billion or five percent of the country’s gross domestic product (GDP) as at October 2,2024.
The minister pointed out that after 18 months of reforms implemented by President Bola Tinubu, the country has changed with gains of the reforms now glaring after gestation period paid, discomfort, difficulty, and increased cost of living.
Edun, said the result of that action was of immediate benefit to the federal, states and local governments coffers
“An amount of the five per cent of the GDP is what those two subsidies were costing when there was a subsidy on PMS; when there was a petroleum product generally for a long time and when there was a subsidy of foreign exchange. Between them, they were costing fiver per cent of the GDP.
“If you say GDP was an average, let’s say $400 billion, we all know what five per cent of that is -$20 billion of funds- that could be going into infrastructure, health, social services.
“And that is what the flow is now coming back into the government’s coffers to be able to be deployed in those area.”
Some economic watchers said the minister’s claim is not adding up since the Tinubu government is still embarking on borrowing spree from both domestic bonds, treasury bills and international sources such as eurobonds and from multi-lateral agencies such as the World Bank and the African Development Bank (AFDB).
“So where is the $20 billion savings? Why has it not been deployed to grow the economy,” a development economist,” Kalu Aja, asked?
Another economist queried the Tinubu administration’s borrowing spree despite claims of such huge savings.
“You saved $20 billion but go cap in hand to borrow $2.2billion. Something is definitely not adding up,”@SBRM wrote on his official X account.
Another concerned Nigerian, Folake Vaughn, queried the impact of such savings, in the light of the current state of the economy..
“Exactly where is the $20 billion savings?These people keep telling lies,and lies and lies and lies,” she wrote on his official @FolakeVaughn X account.
The ICIR reports that a larger chunk of the 2024 budget is being funded by borrowing despite the federal government’s claim of $20 billion subsidy savings.
Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.