The International Monetary Fund has advised Nigeria’s federal government not to reinstate a broad petrol subsidy, recommending instead targeted support for vulnerable households to ease the impact of higher energy costs.
Rodrigo Valdés, director of the IMF’s fiscal affairs department, made the comments during a press briefing on the fund’s Fiscal Monitor at the 2026 annual meetings of the IMF and World Bank in Bangkok on Wednesday.
His remarks came in response to a question about calls in Nigeria to restore the subsidy ahead of an election year, amid concerns that higher fuel prices could raise transport costs, worsen inflation and deepen poverty.
“Protecting people is not the same as protecting the price of fuels,” Valdés said.
He noted that fuel subsidies or measures preventing prices from fully adjusting to an energy shock had cost countries between 1 percent and 1.5 percent of gross domestic product 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 argued that governments should use social safety nets and household data to identify those most in need of assistance rather than subsidising fuel for all consumers.
“There are better tools to deal with this,” he said.
The IMF has long argued that blanket subsidies disproportionately benefit higher-income groups and strain public finances, especially amid rising borrowing costs.
Nigeria’s government recently announced a 30-day petrol discount at Nigerian National Petroleum Company Limited retail stations, prioritising public transport operators, as a temporary measure to cushion rising fuel prices.
