Finance Minister Taiwo Oyedele has warned that any move by the Federal Government to reinstate petrol subsidy could trigger massive capital flight, weaken the naira and push the exchange rate to N3,000, N3,500 or even N4,000 per dollar.

Oyedele, who is Nigeria’s Minister of Finance and Coordinating Minister of the Economy, said a reversal of the current economic reforms could undermine investor confidence and expose the country to further financial pressure.

He gave the warning during a press briefing at the International Monetary Fund and World Bank Annual Meetings in Bangkok, Thailand, on Monday.

The minister said investors were paying close attention to Nigeria’s policy direction, particularly as the country approaches another election cycle.

According to him, concerns remain over whether the government would sustain its economic reforms or abandon some of its policies for political reasons.

Oyedele maintained that even a suggestion that President Bola Tinubu’s administration was considering a return to fuel subsidy could unsettle the financial markets, increase borrowing costs and put additional pressure on businesses and households.

He explained that investors had become less concerned about the possibility of a change in government through the opposition and were instead watching for signs that the current administration might reverse its own 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.

“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.”

The warning comes amid continued public debate over the impact of petrol subsidy removal and the wider economic reforms introduced by the Tinubu administration.

Since the removal of the subsidy, Nigerians have faced higher transportation costs, increased food prices and rising expenses for businesses that depend on petrol and other petroleum products.

The changes have also affected household spending, as many families struggle to cope with the rising cost of basic goods and services.

However, Oyedele argued that restoring the subsidy could create a different set of economic problems, particularly if investors interpreted the decision as evidence that Nigeria was abandoning its reform programme.Nigeria travel guide

He explained that capital flight would not necessarily be limited to foreign investors.

Wealthy Nigerians, business owners and middle-class investors could also seek to protect their money by moving funds into dollars if they became concerned about the stability of the naira.

Such a development, he warned, could increase demand for foreign exchange and place further pressure on the local currency.

A weaker naira would make imported goods more expensive, adding to the cost of food, medicines, machinery, industrial materials and other essential products.

Businesses that rely on imported inputs could also face higher operating costs, potentially passing the additional expenses on to consumers.

Oyedele said ordinary Nigerians would ultimately bear much of the burden if the currency came under severe pressure following a reversal of the government’s economic policies.

The minister also addressed the Nigerian National Petroleum Company Limited’s temporary reduction of petrol retail margins, rejecting the suggestion that the move amounted to a return to fuel subsidy.

He explained that the decision was a commercial measure and should not be confused with a subsidy financed by public funds.Follow Politics

According to him, a company that voluntarily reduces its profit margin to make a product more affordable is not automatically receiving or providing a government subsidy.

The distinction is important because the debate over petrol pricing has continued since the government ended the previous subsidy arrangement.

Nigerians have repeatedly called for measures to reduce the cost of petrol, while the government has defended the need to maintain the reforms and reduce the financial burden associated with subsidising fuel consumption.