The International Monetary Fund (IMF) has advised the Federal Government against restoring a broad petrol subsidy, recommending targeted financial assistance for vulnerable households to cushion the impact of rising energy costs.
The Fund warned that universal fuel subsidies are costly, disproportionately benefit higher-income consumers and place additional pressure on public finances, particularly amid rising borrowing costs.
The Director of the IMF’s Fiscal Affairs Department, Rodrigo Valdés, made the remarks during a press briefing on the Fiscal Monitor at the 2026 IMF and World Bank Annual Meetings in Bangkok.
His comments followed a question about the Fund’s recommendation that energy prices reflect market scarcity, despite concerns that rising petrol prices in Nigeria could increase transportation costs, fuel inflation and worsen poverty.
The question also highlighted growing calls for the government to restore petrol subsidies ahead of an election year.
“Protecting people is not the same as protecting the price of fuels,” Valdés said.
He disclosed that fuel subsidies and other measures preventing energy prices from fully adjusting to shocks had cost countries between 1 per cent and 1.5 per cent of gross domestic product (GDP) in 2026.
Rather than subsidising fuel prices across the board, Valdés urged governments to strengthen social safety nets and use household data to identify those most in need of assistance.
Meanwhile, the Federal Government recently announced a 30-day petrol discount at Nigerian National Petroleum Company (NNPC) Limited retail stations to ease the impact of rising fuel prices, with public transport operators given priority.
The IMF’s position underscores the policy debate over how Nigeria can protect vulnerable households from rising living costs without placing additional strain on government finances.
