Nigeria’s economic reforms have generated N20.40trn in incremental Federal Government resources, but the fiscal pressures associated with the reforms have risen to N30.64trn.
The figures were contained in the Federal Ministry of Finance’s August 2026 reform scorecard presented by the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, at a media briefing in Abuja on Wednesday.
The scorecard, which reviewed the gains, costs and consequences avoided since the reforms began in May 2023, shows that the additional resources generated by the reforms were not sufficient to cover the additional expenditure pressures recorded during the period.
According to the assessment, N15.8trn in petrol subsidy savings was generated across the Federation between June 2023 and December 2025.
Of this amount, the Federal Government received N5.43trn, while states received N6.52trn and local governments N3.88trn.
The Federal Government’s wider incremental resource envelope also included N3.12trn in additional revenue and N11.85trn in borrowing, taking total incremental resources to N20.40trn.
Borrowing therefore accounted for about 58.1 per cent of the additional Federal Government resources, while the Federal Government’s share of subsidy savings represented 26.6 per cent and other revenue 15.3 per cent.
The additional resources were accompanied by N30.64tn in incremental expenditure pressures, creating a N10.24trn gap between additional resources and spending.
The largest expenditure pressures came from wage adjustments and the naira impact of external debt servicing.
The government attributed N9.39trn to wage adjustments and another N9.37trn to the higher naira cost of servicing existing external debt.
Combined, the two items accounted for N18.75trn, or approximately 61.2 per cent of the additional expenditure pressures identified.
Strategic infrastructure, electricity support, domestic debt-service costs and social-welfare interventions accounted for the balance.
The Federal Government said existing revenues financed the gap between the incremental resources and expenditure pressures.
The figures indicate that the reforms expanded the government’s resource base but did not create an equivalent amount of discretionary fiscal space.
Subsidy savings do not represent FG cash windfall
The Ministry of Finance’s presentation also distinguishes between savings generated across the Federation and the Federal Government’s actual share of those savings.
The N15.8tn subsidy savings were distributed among the three tiers of government under the Federation’s revenue-sharing framework.
Consequently, the Federal Government’s direct share was N5.43trn rather than the entire N15.8trn.
The distinction is important in assessing the fiscal impact of subsidy removal, as the reform increased resources available to the Federation rather than creating a standalone pool of cash controlled by the Federal Government.
The composition of the Federal Government’s incremental resources shows a heavy reliance on borrowing.
Of the N20.40trn total, N11.85trn came from additional borrowing, compared with N5.43trn from the Federal Government’s subsidy savings allocation and N3.12trn from other incremental revenue.
On Proshare’s calculation, borrowing supplied 58.09 per cent of the incremental resources.
The reform windfall has been largely absorbed by rising government obligations, leaving limited room for fresh fiscal spending. Of the additional expenditure pressures, N9.39rn was linked to wage adjustments, while the weaker naira added another N9.37trn to the cost of servicing existing external debt.
Other demands came from strategic infrastructure projects, additional electricity support, domestic debt servicing and social intervention programmes.
The spending pressures exceeded the N20.40tn in incremental resources by N10.24tn, a shortfall that was met from existing government revenues. This suggests that the reforms expanded the government’s resource base without creating a comparable pool of freely deployable funds.
The size of the expenditure, however, does not in itself show how efficiently the funds were used, whether projects were completed or the economic returns generated from the spending. Those outcomes will be critical in determining whether the reforms ultimately translate into stronger productivity and growth.
The financing composition means that the increase in fiscal resources has also been accompanied by higher debt obligations and financing costs.
Macroeconomic buffers strengthen
Despite the substantial adjustment costs, several macroeconomic indicators have improved since the reforms began.
The reform scorecard placed Nigeria’s gross foreign exchange reserves at $52.5bn in July 2026, while the premium between the official and parallel foreign exchange markets had narrowed to below five per cent.
Capital importation reached $10.37bn in Q1 2026, while market capitalisation on the Nigerian Exchange approached N150tn in June 2026.
The National Bureau of Statistics also reported real GDP growth of 3.89 per cent in Q1 2026, indicating continued expansion of economic activity.
These developments suggest that the reforms have helped rebuild some of Nigeria’s macroeconomic buffers and improve perceptions of the country’s financial stability.
However, the improvement in financial indicators has not translated evenly across the economy.
The reform gains have yet to fully reach households
Nigeria’s improving macroeconomic picture is yet to translate into a broad-based easing of household pressures, underscoring the difference between disinflation and an actual fall in the cost of living. Headline inflation has continued to moderate, falling to 15.43% in July 2026, according to NBS.
Although, the improvement is being driven largely by the slower pace at which prices are rising, rather than a reversal of the substantial price increases accumulated since the 2023 reforms. More importantly, food inflation accelerated to 20.31%, while food prices rose 5.56% month-on-month in July.
The development is consistent with the World Bank’s assessment of Nigeria’s reform cycle. Its 2026 country framework says the economy is experiencing gradual macroeconomic stabilisation, with stronger external and fiscal positions, but high inflation continues to erode real incomes, while weak access to finance and infrastructure gaps constrain households and businesses.
Also, petrol prices are substantially higher than their May 2023 levels following the removal of the subsidy. The removal of the petrol subsidy fundamentally changed the cost structure of transportation and logistics. The latest NBS dashboard puts the average PMS price at about N1,596.25 per litre, illustrating how far pump prices remain from the heavily subsidised regime that preceded the reform
For households, the combination of higher food prices, fuel costs, interest rates and the earlier depreciation of the naira has translated into significant purchasing-power losses.
This means that lower headline inflation should not necessarily be interpreted as a reversal of the price increases accumulated since the reforms began.
