The Federal Government has announced a significant financial milestone, saving $20 billion through the removal of the petrol subsidy and the adoption of market-based foreign exchange pricing.
This was disclosed by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, during an event in Abuja marking the first 100 days in office of Esther Walso-Jack, Head of the Civil Service of the Federation.
Edun highlighted that the previous subsidy regimes on Premium Motor Spirit (PMS) and foreign exchange were draining the economy, costing the country five percent of its Gross Domestic Product (GDP).
“When there was a subsidy on PMS and on foreign exchange, they collectively cost five percent of GDP. Assuming GDP was $400 billion on average, five percent of that is $20 billion, funds that could now go into infrastructure, health, social services, and education,” he explained.
The minister emphasized that the savings from these reforms are being redirected toward developmental projects that will benefit the nation.
“The real change is that no one can wake up and target cheap funding or forex from the Central Bank to enrich themselves without adding value. Similarly, profiteering from the inefficient petrol subsidy regime is no longer possible,” Edun said.
The move follows President Bola Tinubu’s announcement on May 29, 2023, ending the petrol subsidy regime. The decision has been described as a bold step to address inefficiencies and free up resources for critical investments.
Observers believe the shift signals a new era of fiscal discipline and transparency, with potential long-term benefits for the nation’s infrastructure and social services sectors.
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