NRS Chairman: Fuel subsidy could have pushed naira to N3,500/$

The Chairman of Nigeria's Revenue Service, Zacch Adedeji, has revealed that Nigeria's fuel subsidy bill could have soared to approximately N53 trillion. This staggering amount could have driven the exchange rate to as high as N3,500 per dollar if President Bola Tinubu had not abolished the subsidy in 2023. Adedeji made these statements during an interview on Channels Television, where he defended the decision to remove the petrol subsidy, rejecting claims that the government should have prepared fiscal buffers beforehand.

He underlined that the subsidy was not a sustainable government expenditure, essentially representing borrowing money to purchase petrol at a higher price and selling it to consumers at a lower price. Adedeji argued that establishing a fiscal buffer prior to the subsidy's removal wouldn't have mitigated the underlying fiscal issue, as the government was already financing the subsidy through borrowed resources.

He also highlighted that the scale of the potential subsidy burden could have escalated further due to global oil market developments and geopolitical tensions, which would have surpassed Nigeria's current budget, making up a considerable portion of government spending. Adedeji described Tinubu's decision to abolish the subsidy as a necessary intervention, rather than a policy error, emphasizing the President's focus on the long-term sustainability of the Nigerian economy over short-term political concerns.