The International Monetary Fund (IMF) has advised Nigeria against restoring a general petrol subsidy, recommending targeted financial assistance to protect vulnerable households from rising fuel and transportation costs.
The fund warned that broad-based subsidies are expensive, put pressure on public finances and often benefit higher-income consumers more than poorer households.
Director of the IMF’s Fiscal Affairs Department, Rodrigo Valdés, gave the advice on Wednesday during a briefing on the fund’s Fiscal Monitor at the 2026 IMF-World Bank Annual Meetings in Bangkok, Thailand.
Responding to concerns about rising petrol prices in Nigeria and calls for a subsidy return ahead of the 2027 elections, Valdés said protecting citizens should not be confused with keeping fuel prices artificially low.
Valdés explained that fuel subsidies and measures preventing domestic energy prices from reflecting global market conditions had cost countries between one and 1.5 per cent of gross domestic product in 2026.
He urged governments to redirect resources towards social safety nets and targeted interventions for households most in need.
The IMF’s position comes as the Federal Government recently announced a 30-day petrol discount at Nigerian National Petroleum Company Limited retail outlets, prioritising public transport operators.
Minister of Finance Taiwo Oyedele said NNPC Retail would sell petrol at cost by foregoing its retail profit margin, describing the measure as temporary relief rather than a return to the subsidy regime.
The government also proposed negotiating a ceiling of ₦1,350 per litre on petrol’s ex-gantry or landing cost, subject to monthly reviews.
Meanwhile, Davide Furceri, a division chief in the IMF’s Fiscal Affairs Department, recommended directing support towards public transportation, school feeding programmes, vulnerable farmers and households in affected areas.
He said subsidising bus fares, for instance, could provide more effective relief than keeping petrol prices low for all consumers.
Although Furceri acknowledged that some countries lacked the household data and digital payment systems needed to deliver targeted assistance, he urged governments to adopt temporary alternatives while strengthening their social protection systems.
He stressed that such interventions should be limited, targeted and temporary.
Valdés also warned that broad-based fuel subsidies could worsen global energy pressures by encouraging consumption even when supplies are constrained.
The IMF maintained that allowing energy prices to reflect market conditions, alongside targeted assistance for vulnerable households, would provide a more sustainable approach to managing rising fuel costs without placing excessive pressure on government finances.
