Return to Fuel Subsidy Could Push Exchange Rate to N4k/$ -Oyedele
Nigeria’s Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, has warned that even considering a return to petrol subsidies could trigger capital flight, undermine investor confidence, and push the naira towards N3,000, N3,500, or even N4,000 per dollar.
Oyedele, who ruled out reversing the government’s economic reforms, said any signal that President Bola Tinubu’s administration was contemplating reinstating the subsidy would immediately affect financial markets, raise borrowing costs and worsen economic pressures on households.
Speaking at the closing press briefing of the International Monetary Fund (IMF) and World Bank Annual Meetings in Bangkok, Thailand, the minister said investors had repeatedly questioned whether the government would abandon its reforms ahead of the next election cycle.
He said the domestic and international markets had largely discounted opposition parties’ proposals to restore the subsidy, while investors were pricing in the prospect of Tinubu securing a second term and continuing his economic policies.
“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 added that investors had not factored in a return to subsidy because they expected policy continuity.
According to the minister, a reversal would send a negative signal about the government’s commitment to reforms, potentially prompting investors to move their funds into foreign currencies and placing renewed pressure on the naira.
“If, for any reason, the President were to say we are merely considering the return of fuel subsidy, capital would react immediately,” he said.
“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.”
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 said ordinary Nigerians would ultimately bear the consequences through higher import costs, rising prices and increased economic hardship.
The minister also rejected the characterisation of the Nigerian National Petroleum Company Limited’s temporary reduction in petrol retail margins as a return of subsidies, explaining that it was 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 maintained that Nigeria must sustain its reforms rather than reintroduce policies that could undermine recent macroeconomic gains.
Private investment hits $63 billion in three years
He disclosed that private investment had increased from about $300 million in 2023 to $6 billion in 2026, while the country’s net foreign reserves had risen from barely $3 billion to more than $45 billion.
The minister said the government’s next priority was to translate improved economic stability into stronger investment, lower financing costs, job creation and better opportunities for Nigerians.
Oyedele, however, insisted that the government would not return to fuel subsidies or multiple exchange rates, warning that any reversal could weaken investor confidence and expose the economy to fresh currency pressures.
Central Bank of Nigeria Governor Olayemi Cardoso, who also spoke at the briefing, stressed that policy consistency and transparency remained critical to attracting long-term capital and sustaining economic stability. Nigeria’s 10-Year U.S. Dollar Bond Yield Falls 6 bps
