Oyedele Warns Subsidy Reintroduction Could Weaken Naira, Raise Inflation and Increase Borrowing Costs
The Federal Government has again defended the removal of the petrol subsidy, warning that bringing back the policy could push petrol prices to at least ₦2,000 per litre.
Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, stated this on Thursday during a press briefing on fuel prices and subsidy issues in Abuja.
Oyedele said reintroducing the subsidy could weaken government revenues and put Nigeria’s recent credit-rating improvements at risk, potentially increasing borrowing costs and triggering capital outflows.
He also warned that the resulting pressure could weaken the naira, reduce foreign reserves and reverse progress made in reducing inflation.
According to the minister, the exchange rate could approach ₦3,000 to the dollar within months if the subsidy is restored, while subsidised petrol could cost at least ₦2,000 per litre.
Oyedele argued that the cost of subsidy would ultimately be borne by Nigerians through higher inflation, delayed salaries and pensions, increased taxes or money creation.
He said the government remained open to proposals for restoring the subsidy but challenged proponents to explain its cost, funding source and the pump price it would deliver.
“We will engage in good faith with any proposer that shows its arithmetic,” Oyedele said.