By Ado Oyeyemi
The International Monetary Fund has urged the Federal Government to resist pressure to reinstate a blanket petrol subsidy, recommending direct assistance to vulnerable Nigerians struggling with rising fuel and transportation costs.
The fund warned that a general subsidy could worsen the country’s financial burden while disproportionately benefiting wealthier consumers instead of those most affected by high energy prices.
The IMF’s Fiscal Affairs Department Director, Rodrigo Valdés, made the recommendation during a briefing on Wednesday on the fund’s Fiscal Monitor at the 2026 annual meetings of the IMF and World Bank in Bangkok, Thailand.
Valdés was responding to concerns that allowing petrol prices to reflect market conditions could increase transport fares, fuel inflation and push more Nigerians into poverty, particularly as calls for subsidy restoration grow ahead of the 2027 general elections.
“Protecting people is not the same as protecting the price of fuels,” he said, arguing that governments should rely on social protection programmes and household data to identify citizens who genuinely need financial assistance.
He disclosed that fuel subsidies and policies that prevent energy prices from adjusting to market realities had cost countries between one and 1.5 per cent of their gross domestic product in 2026.
According to him, such interventions also prevent consumers from adjusting their demand when fuel supplies are limited.
The IMF’s Fiscal Affairs Department division chief, Davide Furceri, proposed alternatives, including subsidising public transport, expanding school feeding programmes and providing support to vulnerable farmers.
He said governments could redirect funds spent on general subsidies towards households most affected by rising costs, while ensuring such assistance remained targeted and temporary.
The Federal Government recently announced a 30-day petrol discount at Nigerian National Petroleum Company Limited retail outlets, prioritising public transport operators.
Finance Minister Taiwo Oyedele said the arrangement would involve the company foregoing its retail profit margin rather than reinstating a subsidy.
The government has also proposed negotiating a petrol price ceiling of N1,350 per litre, subject to monthly reviews.
