With Subsidy, Naira’ll Exchange At N4,000/$ — Finance Minister Oyedele Warns

The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, has warned that any return to petrol subsidy could trigger capital flight, undermine investor confidence and push the naira to N4,000 per dollar.

Oyedele gave the warning at a press briefing on the sidelines of the International Monetary Fund and World Bank Annual Meetings in Bangkok, Thailand.

According to him, investors have repeatedly questioned whether the Federal Government would abandon its reforms ahead of the next election cycle.

He said any signal that President Bola Tinubu’s administration is contemplating reinstating subsidy would immediately affect financial markets, raise borrowing costs and worsen economic pressures 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.

“If, for any reason, the President were to say we are merely considering the return of fuel subsidy, capital would react immediately. Air fares would struggle, the naira would come under severe pressure, potentially moving towards N3,000, N3,500 or even N4,000. The very fuel people want subsidised would become far more expensive in naira terms,” the minister said.

Oyedele warned that capital flight could extend beyond foreign investors, as wealthy Nigerians, business owners and middle-class investors might also seek refuge in dollars, further increasing demand for foreign exchange.

He stressed that ordinary Nigerians will ultimately bear the consequences through higher import costs, rising prices and increased economic hardship.

The minister also rejected the description of the Nigerian National Petroleum Company Limited’s temporary reduction in petrol retail margins as a return to subsidy, explaining that it is a commercial decision rather than a payment funded by public resources.

He argued that a company reducing its profit margin to make a product more affordable should not automatically be regarded as receiving or providing a subsidy.

Oyedele, who ruled out reversing the government’s economic reforms, maintained that the government has no plan to return to the subsidy regime removed on May 29, 2023.