The Minister of Finance and Coordinating Minister of Economy, Taiwo Oyedele, has insisted that the Presidency will not bring back fuel subsidy, following widespread clamour over the effect of its removal on the cost of living. The Minister made the statement on Tuesday in Paris, France, as he and President Bola Tinubu met with global investors.
Oyedele noted that subsidies created economic “distortions”, adding that the prices of petrol would not be controlled because the Presidency believed the market was capable of regulating itself. Following the removal of the petrol subsidy in May 2023, Nigeria’s inflation rate surged, reaching a 19-year high.
Headline inflation rose from 22.41% in May 2023 to 34.19% by June 2024, driven by sharply higher fuel, food, and transportation costs, deepening the cost-of-living crisis. The inflation rate rose consecutively following the June 2023 announcement, with food inflation exceeding 39% by October 2024.
The removal, combined with currency devaluation, directly increased transport costs by nearly 300% and exacerbated poverty levels. “We will not bring back fuel subsidy because it creates distortions for the economy, and we won’t introduce price control because we believe in the market… the situation in Iran presents new opportunities for us as the world looks to diversify sources of energy and invest in new markets”, the Minister said.
While speaking earlier, President Tinubu told the investors that Nigeria has recorded stability in its foreign exchange following the removal of the “burden” of fuel subsidy, according to a statement by his Special Assistant on Social Media, Dada Olusegun. “Subsidy that was a burden to the entire country, was removed and ever since we have achieved FX stability”, Tinubu told the investors.
A subsequent statement by his Adviser on Information and Strategy, Bayo Onanuga, emphasised that the economic reform programme of his administration included measures to remove economic distortions and stabilise macroeconomic indicators, laying the foundation for sustained inclusive growth.
He also emphasised transparency and fiscal discipline, and explained the rationale for the swift implementation of bold reforms.