Nigeria’s government says savings generated from the removal of fuel subsidies and foreign exchange market reforms have largely been offset by higher debt servicing costs and increased public spending.
Speaking at the African Emerging Markets Forum in Abuja on Thursday, Finance Minister Taiwo Oyedele said the reforms had previously cost the country about 5 per cent of GDP, but much of the resulting savings had been absorbed by borrowing costs, with interest rates rising from about 8 per cent to as high as 24 per cent.
He said Government expenditure had also increased after the minimum wage was more than doubled to 70,000 naira per month, while funding for an education loan scheme supporting more than 1.5 million students had expanded.
Oyedele also rejected a recent assessment by the International Monetary Fund that millions of Nigerians remain in poverty despite the reforms. He argued that a temporary decline in real incomes was unavoidable following subsidy removal and said the government would measure progress using multidimensional poverty, real per capita income growth and income inequality rather than GDP growth alone.