…Says Nigeria Was Living In ‘Fiscal Illusion’ Before Reform
Daud Olatunji
The Federal Government has defended President Bola Tinubu’s decision to remove fuel subsidy, admitting that the policy pushed more Nigerians into poverty but insisting that the reform was necessary to rescue the country’s economy from what it described as years of “fiscal illusion.”
Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, stated this on Thursday at the Seventh Africa Emerging Markets Forum in Abuja.
According to him, while the subsidy removal worsened poverty in the short term, the policy laid the foundation for long-term economic recovery and sustainable growth.
“You cannot remove subsidy, and people become richer,” Oyedele said.
He explained that the previous subsidy regime created an artificial economic reality that could no longer be sustained.
“Reform is a reset because we were living in fiscal illusions. So, we needed to stop deceiving ourselves so the country can move forward,” he added.
Oyedele acknowledged that the removal of petrol subsidy inevitably reduced the purchasing power of many Nigerians and increased poverty levels.
“That reset meant that income levels in real terms will fall and that will increase poverty,” he said.
However, he argued that the reforms had begun yielding positive results, citing an improvement in Nigeria’s real per capita income growth in 2025.
According to him, Nigeria recorded nearly a 10 per cent real per capita income growth in dollar terms in 2025, placing the country among the fastest-growing economies in terms of lifting citizens out of poverty.
“The good news is that the numbers for 2025 in dollar terms, real per capita income growth was nearly 10 per cent. We intend to sustain that,” Oyedele said.
He stressed that the Tinubu administration has no intention of reversing the subsidy removal, maintaining that restoring the policy would undermine the gains already recorded through the ongoing fiscal reforms.
President Tinubu announced the removal of petrol subsidy on May 29, 2023, shortly after assuming office, triggering sharp increases in fuel prices, transportation costs and the prices of goods and services across the country.
The policy has continued to generate widespread public debate, with labour unions, civil society organisations and opposition figures blaming it for worsening the cost-of-living crisis, while the Federal Government insists it was unavoidable to stabilise public finances and redirect resources to critical sectors of the economy.
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