The International Monetary Fund (IMF) has urged the Federal Government of Nigeria to resist calls to restore a broad petrol subsidy, recommending targeted financial assistance to help vulnerable households cope with rising fuel prices and living costs.
The IMF said blanket fuel subsidies could place additional pressure on government finances while disproportionately benefiting wealthier consumers instead of Nigerians who need assistance the most.
Rodrigo Valdés, Director of the IMF’s Fiscal Affairs Department, made the recommendation during a press briefing on the Fund’s Fiscal Monitor at the 2026 Annual Meetings of the IMF and World Bank in Bangkok.
Valdés was responding to concerns about the impact of rising energy prices on countries such as Nigeria, where higher petrol costs can increase transportation fares, fuel inflation and worsen economic hardship, particularly among low-income households.
The discussion comes amid growing calls for the Federal Government to reconsider the removal of the petrol subsidy ahead of an election year.
According to the IMF official, governments should focus on protecting citizens from the consequences of rising energy costs rather than attempting to keep fuel prices artificially low for everyone.
“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 domestic energy prices from reflecting international market conditions had cost countries between one and 1.5 per cent of their gross domestic product (GDP) in 2026.
Valdés warned that such interventions could become increasingly difficult to sustain as borrowing costs rise and governments face competing demands for public spending.
Instead of restoring a general petrol subsidy, he advised the Nigerian government to strengthen social safety nets and use reliable household data to identify vulnerable citizens who require financial support.
Under this approach, assistance would be directed towards low-income households and other groups most affected by higher energy prices, rather than providing uniform benefits to all fuel consumers.
The Federal Government has already introduced a temporary measure to reduce the impact of rising petrol prices.
It recently announced a 30-day petrol discount at retail outlets operated by the Nigerian National Petroleum Company Limited (NNPC), with priority given to public transport operators.
The initiative is intended to cushion the effect of rising fuel costs, particularly on transportation and other expenses that affect household budgets.
The IMF’s position highlights the challenge facing the Nigerian government as it seeks to balance the need to protect citizens from rising living costs with concerns about public expenditure and fiscal sustainability.
While a broad subsidy could provide relief to consumers, the Fund maintains that targeted assistance would allow the government to concentrate limited resources on households most affected by higher energy prices.
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