Finance Minister and Coordinating Minister of the Economy, Taiwo Oyedele, has warned that bringing back petrol subsidy could weaken the naira to between ₦3,000 and ₦4,000 per dollar, drive investors away and reduce confidence in Nigeria’s economy.
Oyedele spoke on Monday during a press briefing at the International Monetary Fund and World Bank Annual Meetings in Bangkok, Thailand.
He said investors had repeatedly asked whether the Federal Government would abandon its economic reforms before the next election cycle. However, he ruled out reversing the policies.
The minister warned that even suggesting President Bola Tinubu’s government might restore petrol subsidy could unsettle markets, raise borrowing costs and increase pressure on households.
“In all the meetings I have had, I came to a conclusion that the markets, including the domestic market, which you can read from the capital market, and the international market, have largely written off the opposition in Nigeria as being unserious,” he said.
Oyedele said any hint of a possible return to subsidy would trigger an immediate reaction.
“If, for any reason, the President were to say we are merely considering the return of fuel subsidy, capital would react immediately.
“Airfares would struggle, the naira would come under severe pressure, potentially moving towards 3,000, 3,500 or even 4,000. The very fuel people want subsidised would become far more expensive in naira terms,” he said.
He added that wealthy Nigerians, business owners and middle-class investors could also buy dollars to protect their money, increasing foreign exchange demand. Ordinary Nigerians would face higher import costs, rising prices and greater hardship.
Oyedele also said NNPC Limited’s temporary cut in petrol retail margins was a business decision, not a subsidy funded by public money.
Tinubu announced the removal of petrol subsidy on May 29, 2023, at Eagle Square, Abuja.
“Subsidy is gone,” Tinubu declared after being sworn in as Nigeria’s 16th president.
He said the national budget would no longer provide for petrol subsidy from June 2023.
