Wages, debt servicing gulp N18.8trn govt spending — Oyedele

Higher wages and the rising naira cost of servicing Nigeria’s external debt accounted for N18.76 trillion of the federal government’s additional spending between June 2023 and December 2025, according to Taiwo Oyedele, minister of finance and coordinating minister of the economy.

Oyedele disclosed this on Wednesday while presenting the government’s Nigeria Reform Scorecard, which assesses the costs, benefits, and economic harms prevented by the reforms introduced since 2023.

The federal government spent N9.39 trillion on wage adjustments, minimum wage increases, and allowances for public servants, while N9.37 trillion went to external debt service arising from exchange-rate depreciation.
Another N6.5 trillion was spent on strategic infrastructure, making the three categories the largest expenditure items during the period.

Together, the three expenditure lines accounted for about 82 percent of the N30.64 trillion in incremental federal government spending between June 2023 and December 2025.
The spending came as the federal government recorded N20.4 trillion in incremental resources during the period, comprising N5.4 trillion from its share of fuel subsidy savings, N3.1 trillion in incremental independent revenue, and N11.9 trillion in additional borrowing.

The government said about two-thirds of its incremental spending was funded by these new resources, while roughly N10 trillion came from the existing revenue base.
Subsidy removal generated N15.8 trillion in savings for the federation during the period, with N5.4 trillion accruing to the federal government and N10.4 trillion shared with states and local governments.

Oyedele said the figures showed that the reforms were not primarily introduced to raise revenue but to address distortions and corruption associated with the fuel subsidy and foreign exchange markets.
The minister said the N9.37 trillion spent on external debt service reflected the impact of the naira’s depreciation on foreign-denominated obligations.
He explained that while the dollar value of Nigeria’s external debt obligations remained unchanged, the naira cost of servicing those obligations increased significantly following the exchange-rate adjustment.

The government also said the N6.5 trillion spent on strategic infrastructure was one of the three largest expenditure lines during the period.
Oyedele’s presentation comes as the government seeks to demonstrate the fiscal impact of the reforms, including fuel subsidy removal and foreign exchange market reforms.
The scorecard compares Nigeria’s current economic position with a government-estimated “no-reform” scenario based on pre-2023 trends.

According to the assessment, the official exchange-rate premium over the parallel market, which was above 60 percent before the reforms, has fallen below 5 percent.
The government estimates that the premium could have exceeded 150 percent without the reforms, while the legacy Ways and Means stock of about N30 trillion could have doubled.
The reforms have also coincided with an improvement in Nigeria’s external reserves. Gross reserves rose from about $35 billion to $52.5 billion, while net reserves increased from roughly $3 billion to $34.8 billion, according to the scorecard.

However, Oyedele acknowledged that the reforms have imposed significant costs on households and businesses.
The Monetary Policy Rate rose from 18.5 percent in May 2023 to 26.5 percent, while petrol prices increased from about N185 per litre to between N1,100 and N1,400 per litre.
Food inflation has eased from 24.82 percent to 17.52 percent as of June 2026, while headline inflation fell to 15.91 percent from 22.41 percent in May 2023.
Oyedele said poverty and household welfare remained unfinished business, with the next phase of the reform programme focused on translating macroeconomic stability into improved living standards through cash transfers, agricultural interventions, and further fiscal reforms.