THE International Monetary Fund (IMF) has advised the Federal Government against restoring a broad petrol subsidy, recommending targeted support for vulnerable households to cushion the impact of rising energy costs.
News Point Nigeria reports that the Fund said blanket petrol subsidies are expensive, often disproportionately benefit higher-income consumers and worsen fiscal pressures, particularly amid rising borrowing costs.
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The Director of the IMF’s Fiscal Affairs Department, Rodrigo Valdés, stated this during a press briefing on the Fiscal Monitor at the 2026 Annual Meetings of the IMF and World Bank in Bangkok.
His comments followed a question on how the Fund could recommend allowing energy prices to reflect scarcity when higher fuel prices in Nigeria could increase transportation costs, worsen inflation and deepen poverty, especially as the government faces calls to restore the 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.
He explained that fuel subsidies, or measures that prevent prices from fully adjusting to an energy shock, had cost countries between one per cent and 1.5 per cent of gross domestic product (GDP) in 2026.
Rather than restoring a broad subsidy, Valdés said the government should rely on social safety nets and household data to identify people who need assistance and ensure that support reaches those most affected by rising energy costs.
The Federal Government recently announced a 30-day petrol discount at Nigerian National Petroleum Company (NNPC) Limited retail stations, with priority given to public transport operators, as part of efforts to cushion the impact of rising fuel prices.
