The Minister of Finance and Coordinating Minister for the Economy, Taiwo Oyedele, has warned that restoring petrol subsidy could weaken the naira to between N3,000 and N4,000 per dollar, trigger capital flight and undermine investor confidence.
Oyedele gave the warning at a press briefing during the International Monetary Fund and World Bank Annual Meetings in Bangkok, Thailand. He said any indication that the Federal Government was considering a return to subsidy could unsettle financial markets, increase borrowing costs and worsen economic hardship for Nigerians.
The minister explained that wealthy Nigerians and business owners could also move their investments into foreign currencies, increasing pressure on the naira and raising the cost of imports. He also clarified that the Nigerian National Petroleum Company Limited’s temporary reduction in petrol retail margins was a commercial decision and not a return to government-funded subsidy.
However, the African Democratic Congress (ADC) Presidential Campaign Council has challenged Oyedele to provide the economic models supporting his projection. The council’s Director of Media and Publicity, Kola Ologbondiyan, accused the government of using fear to discourage debate on subsidy removal and described the projected exchange rate as unrealistic.
The disagreement follows former Vice President Atiku Abubakar’s proposal to reintroduce a capped and audited production subsidy tied to domestic refining to cushion the impact of high fuel prices on Nigerians.
Meanwhile, President Bola Tinubu has maintained that he has no regrets over removing petrol subsidy in May 2023, insisting that the country will not return to the policy. Vice President Kashim Shettima also defended the administration’s economic reforms, arguing that the economy could have suffered a deeper crisis without the measures introduced by the government.
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