Fuel Subsidy Return Could Push Naira to N4,000/$

Nigeria’s Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, has warned that returning to petrol subsidies could trigger capital flight, undermine investor confidence and push the naira towards ₦4,000 per dollar.

Oyedele gave the warning on Monday, October 19, 2026, during a press briefing following the International Monetary Fund (IMF) and World Bank Annual Meetings in Bangkok, Thailand.

According to the minister, investors remain concerned about the possibility that the Federal Government could reverse its economic reforms ahead of the 2027 general elections.

He said even an announcement that the government was considering reinstating petrol subsidies could provoke an immediate reaction in domestic and international financial markets.

Oyedele warned that such a development could encourage foreign investors to withdraw their funds while prompting Nigerian business owners, wealthy individuals and other investors to move their assets into dollars to protect their wealth.

The resulting increase in demand for foreign exchange, he explained, could put additional pressure on the naira, potentially pushing the exchange rate towards ₦3,000, ₦3,500 or even ₦4,000 per dollar.

He further cautioned that a sharp depreciation of the local currency could increase the cost of imported goods and services, worsening inflation and adding to the financial difficulties faced by households and businesses.

According to Oyedele, the potential consequences could undermine the intended benefit of cheaper petrol under a subsidy arrangement, as currency depreciation could make petroleum products more expensive in naira terms.

The minister maintained that policy consistency was essential to sustaining investor confidence and protecting the progress made under the administration’s economic reforms.

President Bola Tinubu announced the removal of petrol subsidies during his inauguration on May 29, 2023. The decision was part of broader efforts to reduce government expenditure and reform Nigeria’s public finances.

The policy, however, has remained controversial because of its impact on petrol prices, transportation costs and the general cost of living.

Oyedele also rejected suggestions that the Nigerian National Petroleum Company Limited’s temporary reduction in petrol retail margins amounted to a return to subsidies.

He explained that a company reducing its profit margin for commercial reasons was different from the government paying part of the cost of petrol using public funds.

The minister’s comments come amid continued debate over how the government can ease the burden of rising living costs without reversing its economic policies.

His exchange-rate warning represents a possible scenario rather than a certainty that the naira will depreciate to ₦4,000 per dollar.

The Federal Government has maintained that it will not restore the former petrol subsidy system, arguing that reversing the reforms could create further fiscal and economic challenges.