FG Makes Key Revelation on Petrol Subsidy and Currency Floating, Reveals Savings

The Federal Government has announced that it has saved a whopping $20 billion by removing petrol subsidy and adopting market-based foreign exchange pricing.

The revelation was made by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, at an event in Abuja marking the first 100 days in office of Esther Walso-Jack, Head of the Civil Service of the Federation.

According to the minister, the two subsidies cost the country five percent of the Gross Domestic Product (GDP). Edun explained that with an average GDP of $400 billion, the subsidies were collectively costing the country $20 billion.

“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 said.

The minister further noted that the removal of the petrol subsidy and the adoption of market-based foreign exchange pricing have brought about significant changes.

“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,” he added.

It is worth recalling that President Bola Tinubu officially ended the petrol subsidy regime on May 29, 2023. This move was seen as a major step towards economic reform, and the government has been working to mitigate its impact on the citizens by proffering palliatives.