Reforms caused hardship, prevented deeper crisis — Oyedele

The Federal Government has acknowledged that its economic reforms since June 2023 have imposed significant hardship on Nigerians and businesses but maintained that the measures prevented the country from sliding into a deeper economic crisis.

Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, made this known on Wednesday while presenting the Federal Government’s reform scorecard at a media briefing.

The scorecard assessed the impact of major policies introduced by the administration, including the removal of petrol subsidy and the unification and liberalisation of the foreign exchange market.

Oyedele admitted that the reforms triggered higher prices, a sharp adjustment in the naira and increased borrowing costs, saying the government was not attempting to conceal their impact on citizens.

“Those decisions came at a real cost, and we are not here to pretend otherwise. Prices rose. The naira adjusted sharply. Households and businesses felt it, and many still do,” he said.

He explained that the scorecard was designed to assess not only the costs of the reforms but also the economic problems the government believes they prevented.

According to him, the assessment contains 25 indicators covering five broad areas: fiscal sustainability, external stability, investment climate, social impact, and growth and productivity.

The assessment compares Nigeria’s economic position before the reforms with its current situation and a projected “no-reform” scenario, which estimates what could have happened if the policies in place before 2023 had continued.

Oyedele said the counterfactual analysis was necessary because comparing prices before and after the reforms alone would not capture the full economic impact.

“It is harder to see what did not happen,” he said, explaining that the government’s assessment sought to estimate the potential damage that could have occurred had the reforms been delayed.

On foreign exchange, the minister defended the decision to unify and liberalise the market, saying the previous system had become unsustainable and encouraged arbitrage and corruption.

“We are talking about an exchange rate system that had become a source of arbitrage, destruction and corruption, rather than stability,” he said.

Oyedele also defended the removal of the petrol subsidy, arguing that the system had largely benefited rent-seekers rather than ordinary Nigerians.

He said the reforms had increased resources available to the federation, while additional revenue from government-owned entities had also expanded the government’s fiscal capacity.

According to him, the additional resources have supported government spending on wages, debt servicing, infrastructure and other programmes.

He cited the increase in the national minimum wage from N30,000 to N70,000, student loans, cash transfers, subsidised mortgages and agricultural support as some of the measures introduced to cushion the effects of the reforms.

Oyedele also said the government had increased spending on strategic infrastructure while continuing to meet its external debt obligations.

However, he acknowledged that the naira’s depreciation had substantially increased the naira cost of servicing foreign-currency debt.

“If we’re paying $1m before in interest on our foreign debts, it is still the same $1m, but instead of N460, it’s now N1,415,” he said.

“You don’t negotiate, you don’t delay. You pay because delay or default have consequences.”

The minister further claimed that the reforms had improved the ability of state governments to meet salary and pension obligations, saying 27 states had previously struggled with such payments, while the government’s current assessment puts the figure at zero.

Despite highlighting these gains, Oyedele stressed that the scorecard was not intended to portray the reforms as an unqualified success.

“We are being honest about the cost. We are not saying all of it is rosy,” he said.

“A scorecard that only lists wins is not a scorecard; it’s a campaign leaflet, and we did not come here to give you one.”

He noted that the monetary policy rate had risen sharply and that petrol prices had increased substantially since the reforms began.

“Petrol at the pump had risen from roughly N185 a litre to between N1,100 and it is a major felt cost, and I will not stand here and tell you otherwise,” he said.

Oyedele nevertheless maintained that the impact of the reforms should be assessed alongside the potential consequences of retaining the previous policies.

He said the Ministry of Finance would make the reform scorecard and supporting data available to journalists, editors and independent analysts for scrutiny.

“You can verify. You can validate,” the minister said.