FG’s Extra Spending Hits N30.64tn Amid Reform Gains

Nigeria’s economic reforms created additional fiscal space for government, but the Federal Government’s extra expenditure reached N30.64 trillion between June 2023 and December 2025, reflecting the heavy financial pressures that accompanied the removal of petrol subsidy and foreign exchange reforms.

Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, disclosed the figures on Wednesday during a media briefing on the Federal Government’s reform scorecard.

The figures show that while the reforms generated additional resources for the Federation, much of the fiscal room was quickly absorbed by higher wages, external debt servicing, infrastructure spending and other government obligations.

Oyedele said the reforms mobilised N15.8 trillion in resources for the Federation through subsidy savings between June 2023 and December 2025.

The amount was not a separate cash balance sitting in the Federation Account under the label of subsidy savings. Rather, the impact was reflected through increased resources available to the Federation, including higher naira proceeds from dollar-denominated transactions following the foreign exchange reforms.

Of the N15.8 trillion mobilised, N5.4 trillion went to the Federal Government, while N10.4 trillion was distributed to states and local governments.

Item	Amount
Resources mobilised through reforms	N15.8tn
Federal Government share	N5.4tn
States and local governments	N10.4tn
Additional Federal Government expenditure	N30.64tn
Wage adjustments, minimum wage and allowances	N9.39tn
External debt servicing	N9.37tn
Strategic infrastructure	N6.5tn

The Federal Government’s share therefore represented only a portion of the resources generated, while subnational governments received the larger share.

Yet, during the same period, the Federal Government incurred N30.64 trillion in additional expenditure.

Oyedele said N9.39 trillion of the additional spending went into wage adjustments, minimum wage increases and allowances for public servants.

Another N9.37 trillion was used for external debt servicing, while N6.5 trillion went into strategic infrastructure.

The three areas alone accounted for N25.26 trillion, representing the bulk of the additional expenditure recorded during the period.

The N9.39 trillion spent on workers was also substantially higher than the Federal Government’s N5.4 trillion share of the resources mobilised through the reforms.

Oyedele said the Federal Government generated N20.4 trillion in incremental resources during the period when additional borrowing and independent revenue are included.

The figure comprised the N15.8 trillion mobilised through the reform measures, N3.1 trillion in additional independent revenue and N11.9 trillion in incremental borrowing.

The minister said the additional independent revenue was driven largely by higher remittances and surpluses from government-owned entities.

He also argued that borrowing would have been considerably higher without the fiscal space created by the reforms.

The figures therefore present a more complicated picture of the reform programme. While the policies created additional resources, the government simultaneously faced a sharp rise in its expenditure obligations.

External debt servicing was one of the biggest pressures.

Oyedele attributed much of the increase in naira debt-servicing costs to the depreciation of the currency.

He explained that although the dollar value of Nigeria’s external debt did not automatically increase because of the naira’s depreciation, the amount of naira required to service dollar-denominated obligations rose significantly.

Using an illustration, the minister said a $1 million interest payment that previously cost about N460 million would now require roughly N1.415 billion.

The government, he said, could not simply suspend such payments because failure to meet external obligations could expose the country to serious economic consequences.

The fiscal impact of the reforms also extended beyond direct savings from petrol subsidy removal.

The foreign exchange reforms increased the naira value of dollar-denominated government receipts. Customs collections, for instance, benefited from the higher naira value attached to import duties denominated in foreign currency, while petroleum-related tax receipts also increased in naira terms.

Oyedele argued that the previous foreign exchange arrangement had created distortions, including implicit subsidies, arbitrage opportunities and rent-seeking.

He said the reforms were therefore intended to correct structural weaknesses in the economy rather than simply increase government revenue.

For states and local governments, the reforms produced a significant increase in available resources.

The N10.4 trillion distributed to the two tiers represented about two-thirds of the N15.8 trillion mobilised for the Federation.

The government has linked the increase to higher monthly Federation Account allocations and improved capacity among states to meet salary and pension obligations.

Oyedele said 27 states had previously struggled with salary and pension payments, while the government’s current assessment puts the number at zero.

The reform period has also seen the increase in the national minimum wage from N30,000 to N70,000, alongside the introduction of student loans, cash transfers, subsidised mortgages and agricultural support programmes.

But Nigerians have also felt the cost of the transition.

Oyedele acknowledged that the reforms imposed substantial pressure on households and businesses, particularly through the removal of the petrol subsidy and the adjustment of the foreign exchange regime.

The end of the petrol subsidy triggered a sharp increase in fuel prices and transportation costs, while the naira adjustment increased the domestic cost of imported goods and foreign currency obligations.

Higher interest rates and rising living costs added further pressure on consumers and businesses.

The minister’s acknowledgement is significant because it places the government’s fiscal argument against the immediate economic experience of Nigerians.

While the Federal Government maintains that the reforms were necessary to prevent deeper fiscal and economic problems, households have had to contend with higher transportation, food, energy and financing costs during the adjustment period.

Oyedele said the government was not presenting the reforms as an unqualified success.

Rather, he said the scorecard was intended to compare both the benefits and costs of the policies with what could have happened if the previous system had remained in place.

The government’s position is that the reforms created fiscal space that would otherwise have been unavailable and reduced the risks associated with maintaining expensive subsidies and a distorted foreign exchange regime.

For Nigerians, however, the ultimate test will be whether the additional fiscal space translates into stronger purchasing power, lower economic pressures, increased investment and improved living standards.

The numbers released by the government show the scale of the competing pressures.

Nigeria generated additional resources through the reforms, but the Federal Government’s additional expenditure during the same period was almost twice the resources mobilised through the reform-related measures.

The largest spending pressures came from wages, external debt servicing and infrastructure, which together consumed N25.26 trillion.

The central question now is whether the fiscal space created by the reforms can eventually produce economic gains large enough to offset the immediate costs experienced by households and businesses.

For the Federal Government, the reforms represent a necessary correction that created resources and reduced the risk of a deeper fiscal crisis.

For Nigerians, the assessment is likely to depend less on the amount of resources mobilised and more on whether those resources eventually translate into cheaper living costs, better infrastructure, stronger employment opportunities and improved household incomes.

The reform scorecard therefore captures a difficult transition rather than a simple success or failure story: government gained additional fiscal space, expenditure pressures surged, and Nigerians absorbed much of the immediate economic pain.

The challenge for the Federal Government is now to convert the fiscal space created by the reforms into tangible economic improvements that Nigerians can feel.