The International Monetary Fund (IMF) has cautioned the Nigerian government against bringing back a nationwide petrol subsidy, urging it to provide direct and targeted assistance to vulnerable citizens struggling with rising fuel prices and the cost of living.
The Fund said a blanket subsidy would place additional pressure on public finances, arguing that government resources would be better spent supporting low-income households and other groups most affected by increasing energy costs.
Rodrigo Valdés, Director of the IMF’s Fiscal Affairs Department, gave the advice during a press briefing at the 2026 IMF and World Bank Group annual meetings in Bangkok, Thailand. He was responding to concerns about rising petrol prices in Nigeria and growing calls for the government to restore subsidies ahead of the 2027 general elections.
Valdés acknowledged that rising fuel prices could create significant political pressure but maintained that governments must recognise the global factors driving energy costs and the financial implications of keeping prices artificially low.
He explained that protecting citizens from the effects of rising fuel prices did not necessarily mean subsidising petrol for every consumer.
According to the IMF official, governments should consider redirecting funds that would otherwise be spent on universal fuel subsidies towards people who need assistance the most.
He also suggested that governments could provide targeted support for public transport users to reduce the impact of higher petrol prices on transport fares.
The IMF maintained that blanket fuel subsidies are expensive and often benefit wealthier households disproportionately because they generally consume more fuel than poorer households.
The Fund further warned that keeping fuel prices artificially low could prevent consumers from adjusting their demand when global supplies become constrained, potentially placing additional pressure on international energy prices.
IMF RECOMMENDS TARGETED SUPPORT FOR VULNERABLE NIGERIANS
Beyond assistance for public transport users, the IMF recommended several measures to cushion the impact of rising energy costs on vulnerable citizens.
These include strengthening social safety nets, improving household data systems to identify people in need, supporting vulnerable farmers and expanding school feeding programmes.
The Fund also called for assistance to be limited, properly targeted and temporary, rather than introducing expensive measures that benefit all consumers regardless of their financial circumstances.
However, it acknowledged that some countries might struggle to identify eligible beneficiaries because of inadequate household records and digital payment infrastructure. It advised governments to adopt alternative delivery methods while working towards stronger systems.
FG INTRODUCES TEMPORARY MEASURES TO EASE FUEL COSTS
The IMF’s position comes as Nigeria faces renewed pressure over rising petrol prices following increases in international energy costs.
The Federal Government recently announced a 30-day petrol discount at Nigerian National Petroleum Company Limited (NNPC) retail outlets, with public transport operators given priority.
Finance Minister Taiwo Oyedele explained that NNPC retail outlets would sell petrol at cost by foregoing their retail profit margin. The measure was presented as temporary relief rather than a return to the previous subsidy system.
The government has also proposed negotiating a ceiling of ₦1,350 per litre on petrol’s ex-gantry or landing cost, subject to monthly reviews, as part of efforts to manage fuel price volatility.
The IMF’s advice highlights the challenge facing the Nigerian government as it seeks to protect households from rising living costs while maintaining fiscal stability.
Although restoring a general petrol subsidy could provide immediate relief to consumers, the Fund argues that targeted assistance would allow the government to direct limited resources towards those most affected without placing excessive pressure on public finances.
The debate is expected to remain significant as Nigeria approaches another election cycle, with fuel prices, transport costs and household purchasing power continuing to influence public concerns.
