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Bringing Back Fuel Subsidy Will Crash Naira to N4,000/$ — Finance Minister
The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, has cautioned that any attempt to reintroduce petrol subsidy would trigger capital flight, erode investor confidence, and push the naira to as low as N4,000 to the dollar.
Oyedele issued the warning on Monday while briefing journalists on the sidelines of the International Monetary Fund and World Bank Annual Meetings in Bangkok, Thailand.
He disclosed that foreign investors had consistently expressed concerns over whether the Federal Government would sustain its reforms as the next election approaches.
According to him, the financial markets, both domestic and international, have largely dismissed opposition promises to bring back subsidy as unserious, adding that even a hint that the administration of President Bola Tinubu was reconsidering subsidy would unsettle the market.
“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,” Oyedele said.
He warned that a mere announcement of a possible subsidy return would provoke an immediate negative reaction in the economy.
“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 stated.
The minister noted that the panic would not be limited to foreign investors, as wealthy Nigerians, entrepreneurs and middle-class citizens would also rush to convert their holdings to dollars as a hedge, thereby intensifying pressure on foreign exchange.
Oyedele also dismissed insinuations that the recent adjustment in petrol pricing by the Nigerian National Petroleum Company Limited amounted to a reintroduction of subsidy.
He clarified that the development was a commercial decision to cut retail margin and not a subsidy funded from the Federation Account, stressing that a company reducing its profit to make a product cheaper should not be misconstrued as subsidy payment.
