The federal government of Nigeria has declared a total end to the regime of fuel and foreign exchange subsidies in the country.
According to the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, who made the declaration during the presentation of the Nigeria Development Update by the World Bank in Abuja on Thursday, October 17, both subsidies have been extinguished.
Edun revealed that the subsidy removal was necessary because it was costing the country too much and had become unsustainable.
According to him, these subsidies had drained the country’s economy, costing over N10 trillion, which amounts to five percent of Nigeria’s Gross Domestic Product (GDP).
He commended the administration of President Bola Tinubu for ending the subsidy regime, which had lingered for over 40 years.
The Minister acknowledged the difficulties and pain that come with such bold reforms the Tinubu administration is embarking upon, but emphasized the benefits that would accrue to the country over the long run.
“For the first time in 40 years, the vexed issue of fuel subsidy and linked to it, the foreign exchange subsidy, costing 5 percent of GDP has gone.
“It takes time to do reform. So what started on May 29, 2023, taken from one place, tried to re-exit in another place, and it was finally extinguished.
“We have market pricing of PMS and with that, there’s huge benefit not only to NNPC, which was bearing the brunt, but to the economy as a whole, including the state governments and the local governments.
“In the same regard, market pricing of foreign exchange. And it’s a difficult step, apart from all the other things that you do to ameliorate the pain generally of macroeconomic reform.
“In this case, we sat down with the unions yesterday. We explained the economic trajectory the country was on, and we explained the opportunity which we all needed to ensure that we do not miss.
“Continuing inflation, getting the economy growing again, repairing a trillion’s hole. I mean, you can work out the figure yourself.
“When you lose 5% of GDP, I think Dr. Ogeo said it all the other day. But if you imagine that we now have those funds back each month, each day, with market pricing of PMS, the government has money at the federal, state, and private levels, and local government levels, for housing, for infrastructure.
“It is a very, very significant point and it’s President Bola Tinubu that has been able to do what was there for 40 years,” Edun said.