The International Monetary Fund has cautioned the Federal Government against reinstating a general petrol subsidy, recommending targeted financial assistance for low-income households to ease the burden of rising fuel prices.
The fund said blanket subsidies were costly to public finances and often favoured wealthier consumers, warning that restoring the policy could worsen Nigeria’s fiscal challenges amid increasing borrowing costs.
The IMF’s Fiscal Affairs Department Director, Rodrigo Valdés, gave the advice during a briefing on the fund’s Fiscal Monitor at the 2026 annual meetings of the IMF and World Bank in Bangkok, Thailand, on Wednesday.
Valdés spoke against the backdrop of concerns that higher petrol prices could increase transport fares, fuel inflation and deepen hardship, particularly as pressure mounts on the government to restore subsidies ahead of the 2027 general elections.
“Protecting people is not the same as protecting the price of fuels,” he said, arguing that governments should support vulnerable citizens directly rather than keep fuel prices artificially low.
He disclosed that subsidies and other measures designed to prevent energy prices from adjusting fully to market conditions had cost countries between one and 1.5 per cent of their gross domestic product in 2026. According to him, such interventions are expensive and frequently benefit higher-income earners more than the poor.
The IMF recommended using social protection programmes, household data and targeted transport support to assist those most affected. Its Fiscal Affairs Department division chief, Davide Furceri, suggested subsidising bus fares, expanding school feeding programmes and providing assistance to vulnerable farmers as alternatives to a blanket fuel subsidy.
The advice comes after the Federal Government announced a 30-day petrol discount at Nigerian National Petroleum Company Limited filling stations, prioritising public transport operators. Finance Minister Taiwo Oyedele described the measure as temporary relief, saying the NNPC would sell petrol at cost by foregoing its retail profit margin.
The government has also proposed a monthly review of a N1,350-per-litre ceiling on petrol’s ex-gantry or landing cost.
