FG reveals key insights on petrol subsidy, currency floating, announces savings

The Federal Government claims that by eliminating the gasoline subsidy and switching to market-based foreign exchange pricing, it has saved an astounding $20 billion.

At an event in Abuja commemorating the first 100 days of Esther Walso-Jack’s tenure as the Federation’s Head of the Civil Service, Wale Edun, Minister of Finance and Coordinating Minister of the Economy, made the announcement.

The minister claims that the two subsidies take five percent of the nation’s GDP. Edun clarified that the subsidies were costing the nation $20 billion in total, given an average GDP of $400 billion.

Both PMS and foreign exchange subsidies together cost 5% of GDP when they were in place. Five percent of an average GDP of $400 billion is $20 billion, which could now be used for social services, education, health care, and infrastructure, he said.

The minister added that there have been major changes since the gasoline subsidy was eliminated and market-based foreign exchange pricing was implemented.

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“The true shift is that nobody can wake up and target the Central Bank’s cheap funding or forex to enrich themselves without contributing value.”

“In a similar vein, it is no longer feasible to profit from the ineffective gasoline subsidy system,” he continued.

It is important to remember that on May 29, 2023, President Bola Tinubu formally terminated the gasoline subsidy program. This action was viewed as a significant step toward economic reform, and the government has been providing palliatives to lessen its effects on the populace.