The International Monetary Fund (IMF) has warned the Federal Government against restoring a blanket petrol subsidy, urging authorities to prioritise targeted financial assistance for vulnerable households amid rising energy costs.
The Fund said broad fuel subsidies are expensive, disproportionately benefit higher-income consumers and increase pressure on public finances, particularly as borrowing costs rise.
According to a report by Channels Television, the IMF Director of the Fiscal Affairs Department, Rodrigo Valdés, made the recommendation during a press briefing on the Fiscal Monitor at the 2026 IMF and World Bank Annual Meetings in Bangkok.
Valdés spoke in response to concerns that allowing fuel prices to reflect market conditions could increase transport fares, worsen inflation and deepen poverty in Nigeria.
The discussion comes amid growing calls for the government to restore petrol subsidies ahead of the 2027 general elections, as Nigerians continue to grapple with the effects of high fuel prices on living costs.
“Protecting people is not the same as protecting the price of fuels,” Valdés said.
He explained that fuel subsidies and other measures designed to prevent energy prices from adjusting fully to supply shocks had cost countries between one and 1.5 per cent of their gross domestic product in 2026.
The IMF official argued that governments could achieve better results by directing assistance towards households that need it most rather than subsidising fuel prices across the board.
He recommended the use of social safety nets and household data to identify vulnerable citizens and ensure that support reaches the intended beneficiaries.
FG Introduces Temporary Petrol Discount
The IMF’s advice comes as the Federal Government seeks to cushion the impact of rising petrol prices on Nigerians.
The government recently announced a 30-day petrol discount at Nigerian National Petroleum Company Limited retail outlets, with public transport operators given priority.
The temporary measure is intended to ease some of the pressure from rising fuel costs, particularly on transport operators and commuters.
However, the IMF’s position highlights the policy challenge facing the government as it seeks to balance the need to protect households from rising living costs with concerns about public spending and fiscal sustainability.
Rather than restoring a broad petrol subsidy, the Fund is advocating targeted interventions designed to support vulnerable households without imposing the wider financial burden associated with keeping fuel prices artificially low.