International Monetary Fund, on Wednesday, warned the Federal Government against restoring the broad petrol subsidy, advising that it should rather deploy targeted support for vulnerable households to cushion the impact of rising energy costs.
IMF argued that blanket petrol subsidies were expensive, often benefited higher-income consumers disproportionately and could worsen fiscal pressures amid rising borrowing costs.
Director of the IMF’s Fiscal Affairs Department, Rodrigo Valdés, gave this warning during a press briefing on the fund’s fiscal monitor at the 2026 annual meetings of the IMF and World Bank in Bangkok, Thailand.
His spoke while answering question on how the fund could recommend allowing energy prices to reflect scarcity when higher fuel prices in Nigeria could raise transport costs, worsen inflation and deepen poverty, particularly when the government was facing calls to restore petrol subsidy ahead of an election year.
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“Protecting people is not the same as protecting the price of fuels,” Valdés said.
According to him, fuel subsidies or measures preventing prices from adjusting fully to an energy shock had cost countries between 1 percent and 1.5 percent of gross domestic product (GDP) in 2026.
“It’s first fiscally very costly, and second, if you look at the pattern of consumption, it’s easy to see that that subsidy is readily regressive in many places,” he said.
Valdés said governments should rather use social safety nets and household data to identify people who need assistance.
“There are better tools to deal with this,” he said.
To cushion the impact of rising fuel prices,
Federal Government recently announced a 30-day petrol discount at Nigerian National Petroleum Company Limited retail stations, with priority for public transport operators.
