HARRISON EDEH
THE Federal Government’s economic reforms generated ₦20.4 trillion in incremental resources between June 2023 and December 2025, but the government spent ₦30.64 trillion on reform-related expenses over the same period, leaving a ₦10.24 trillion funding gap that had to be absorbed by the existing revenue base.
The gap is one of the clearest indications of the fiscal pressure created by the government’s attempt to cushion the impact of fuel subsidy removal and foreign exchange reforms, even as it argues that the measures prevented more serious economic damage.
The figures are contained in the Federal Ministry of Finance’s underlying fiscal analysis accompanying Nigeria’s Reform Scorecard presented by Finance Minister and Coordinating Minister of the Economy, Taiwo Oyedele.
The analysis shows that while the reforms created additional fiscal space, the resources were insufficient to finance the full cost of the government’s response to the economic adjustment.
Reform gains fell short of the cost
The Federal Government’s ₦20.4 trillion in incremental resources came from subsidy savings, additional revenue from government-owned entities and incremental borrowing. However, incremental expenses reached ₦30.64 trillion.
This means about one-third of the incremental expenditure, roughly ₦10 trillion, came from the government’s existing revenue base rather than directly from the resources generated by the reforms.
The pressure was particularly significant because the government had to allocate large amounts to wages, external debt service and infrastructure.
Wage adjustments, minimum wage increases and allowances for public servants accounted for ₦9.39 trillion, while ₦9.37 trillion went into external debt service largely because of the naira’s depreciation.
Strategic infrastructure only accounted for another ₦6.5 trillion, the government stated.
Oyedele, however, argued that the reforms should not be judged simply by comparing the resources they generated with the money spent.
“We are not here to pretend these reforms were painless. We are here to show you, honestly and with the numbers, what they cost, the benefits they delivered, and the harm they prevented,” he said.
FX reform created another subsidy burden
One of the most striking consequences of the reforms was the emergence of a large electricity subsidy bill.
The government spent an incremental ₦3.14 trillion on electricity subsidies between June 2023 and December 2025 as the foreign exchange reforms increased power-sector costs.
The burden rose from ₦177 billion between June and December 2023 to ₦1.49 trillion in 2024 and another ₦1.48 trillion in 2025.
This creates a significant policy paradox, meaning that while the removal of the petrol subsidy was intended to eliminate a major drain on public finances, the currency adjustment created pressure for additional government support for electricity tariffs.
The fiscal analysis also shows that the monetary response to inflation carried another cost.
The Monetary Policy Rate rose from 18.5 per cent to 26.5 per cent, contributing to an additional ₦1.24 trillion in domestic debt-service costs.
The average coupon rate on short-term government debt also increased from six per cent in 2022 to 20 per cent in 2025.
Debt still rose sharply
Despite the government’s efforts to reduce reliance on Ways and Means financing, Nigeria’s total public debt increased from ₦49.85 trillion in June 2023 to ₦160.06 trillion by December 2025.
Domestic debt rose from ₦30.21 trillion to ₦84.85 trillion, while external debt increased from $43 billion to $52 billion.
The government’s post-reform net borrowing also stood at ₦39.73 trillion, even after the securitisation of ₦30 trillion in legacy Ways and Means obligations. The depreciation of the naira further magnified the fiscal burden.
According to the analysis, the exchange-rate adjustment added ₦9.37 trillion to external debt-service costs, with the average exchange rate used for external debt service rising from ₦684.01 per dollar in 2023 to ₦1,529.10 in 2025.
Annual naira payments for external debt service consequently increased from ₦2.4 trillion in 2023 to ₦6.17 trillion in 2025.
The biggest unfinished test
While the government points to stronger reserves, lower inflation and improved fiscal stability as evidence that the reforms are working, the same scorecard acknowledges that the benefits have not yet fully translated into household welfare.
Petrol prices rose from about ₦185 per litre before the reforms to between ₦1,100 and ₦1,400, while the increase in the minimum wage from ₦30,000 to ₦70,000 has produced mixed real welfare outcomes because of inflation.
Oyedele acknowledged that poverty and household welfare remain unfinished business.
“The next phase of our work is squarely about translating macroeconomic stability into relief that households actually feel,” he said, pointing to expanded cash transfers, agricultural interventions and greater coordination with states and local governments.
The government argues that the alternative would have been more damaging. But the fiscal numbers show that stabilising the economy has itself been expensive, with the reforms shifting pressure across government finances rather than eliminating it.
Oyedele said the administration would continue with the reforms, including tax and fiscal changes, while maintaining a unified exchange-rate system.
“On prices, our goal over the medium term is to keep pushing headline inflation toward single digits, without ever going back to the distortionary subsidies that got us into this position in the first place,” he said.
The central question now is whether the government can convert the claimed macroeconomic gains into stronger household welfare without creating another round of fiscal pressure.
