Reported by Oravbiere Osayomore Promise.
The International Monetary Fund (IMF) has warned the Nigerian government against restoring a broad petrol subsidy, urging authorities to adopt targeted financial assistance and social protection programmes to cushion the impact of rising energy costs on vulnerable households.
Rodrigo Valdés, director of the IMF’s Fiscal Affairs Department, gave the advice during a press briefing on the Fund’s Fiscal Monitor at the 2026 annual meetings of the IMF and World Bank in Bangkok, Thailand, on Wednesday, October 14.
Valdés was responding to a question about the consequences of allowing energy prices to reflect market conditions, particularly in Nigeria, where rising petrol prices have increased concerns about transportation costs, inflation and worsening poverty.
The discussion comes amid renewed calls for the restoration of petrol subsidies ahead of Nigeria’s 2027 general elections, as households and businesses continue to face pressure from high living costs.
According to Valdés, broad fuel subsidies are expensive for governments and frequently benefit higher-income consumers disproportionately because they generally consume more fuel.
He said measures that prevent energy prices from adjusting fully to supply shocks had cost countries between one and 1.5 per cent of gross domestic product in 2026.
“Protecting people is not the same as protecting the price of fuels,” Valdés said, arguing that governments should focus on helping people affected by rising prices rather than suppressing fuel prices for everyone.
The IMF official recommended the use of social safety nets and household data to identify vulnerable people who require assistance, rather than introducing blanket subsidies that could place additional pressure on public finances.
“There are better tools to deal with this,” he said.
The warning comes as the Federal Government pursues measures to cushion the effects of rising petrol prices. The Presidency recently announced a temporary 30-day arrangement under which the Nigerian National Petroleum Company Limited would forgo its retail profit margin and sell petrol at cost, with priority given to public transport operators.
The government has maintained that the temporary measure is intended to provide relief without reversing the broader fuel subsidy removal policy.
Nigeria removed its longstanding petrol subsidy in May 2023, following President Bola Tinubu’s declaration during his inauguration. The decision significantly altered petrol pricing and triggered widespread debate over its effects on inflation, transportation, household spending and government finances.
While supporters of subsidy removal argue that it reduces fiscal pressure and frees resources for other priorities, critics have called for stronger measures to protect Nigerians from the resulting cost-of-living pressures.
The IMF’s latest position underscores the challenge facing the government: maintaining fiscal stability while ensuring that economic reforms do not leave vulnerable households without adequate support.
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