The International Monetary Fund (IMF) has warned the Federal Government against restoring a blanket petrol subsidy, describing the policy as financially costly and regressive while recommending targeted assistance for vulnerable Nigerians affected by rising energy prices.
The Director of the IMF’s Fiscal Affairs Department, Rodrigo Valdés, gave the advice on Wednesday, October 14, 2026, during a press briefing on the Fund’s Fiscal Monitor at the 2026 annual meetings of the IMF and World Bank in Bangkok, Thailand.
Valdés was responding to questions about the impact of rising fuel prices on Nigerians, particularly the increase in transportation costs, inflation and poverty, amid renewed calls for the government to restore petrol subsidies ahead of the 2027 general elections.
“Protecting people is not the same as protecting the price of fuels,” he said, explaining that blanket subsidies often disproportionately benefit higher-income earners, who generally consume more fuel, while placing additional pressure on government finances.
According to the IMF official, fuel subsidies and other measures that prevent energy prices from adjusting fully to supply shocks cost countries between one and 1.5 per cent of their gross domestic product (GDP) in 2026.
Valdés urged governments to redirect resources towards social safety nets and targeted financial assistance for households most affected by rising energy costs, rather than subsidising fuel prices for all consumers.
He argued that supporting vulnerable citizens directly would provide more effective relief while allowing energy prices to reflect market conditions.
Another IMF official, Davide Furceri, also recommended targeted interventions, including assistance for public transport users, school feeding programmes and support for vulnerable farmers. He acknowledged that some countries might lack the household data and digital payment systems needed to implement such programmes effectively.
The IMF’s position comes as Nigeria faces renewed pressure over petrol affordability following increases in fuel prices. The Federal Government recently announced a 30-day petrol discount at Nigerian National Petroleum Company (NNPC) Limited retail outlets, prioritising public transport operators.
Finance Minister Taiwo Oyedele said the arrangement would allow NNPC retail outlets to sell petrol at cost by foregoing their retail profit margin, describing it as temporary relief rather than a restoration of the subsidy regime.
The government has also proposed negotiating a petrol price ceiling of N1,350 per litre at the ex-gantry or landing-cost level, subject to monthly reviews.
Nigeria removed its long-standing petrol subsidy in May 2023, a decision that significantly increased fuel costs and intensified pressure on household budgets, transportation fares and food prices.
The renewed debate over subsidy policy highlights the challenge facing the government in balancing fiscal sustainability with the need to ease the cost-of-living burden on Nigerians.
