The International Monetary Fund (IMF) has advised Nigeria against restoring a blanket petrol subsidy, urging the Federal Government to provide targeted financial assistance to poor and vulnerable households amid rising fuel prices and cost-of-living pressures.

Rodrigo Valdés, Director of the IMF’s Fiscal Affairs Department, gave the advice on Wednesday during a press briefing on the Fund’s Fiscal Monitor at the 2026 annual meetings of the IMF and World Bank in Bangkok, Thailand.

Valdés said broad fuel subsidies were expensive, often benefited higher-income consumers disproportionately and could worsen government finances at a time when borrowing costs remained high.

“Protecting people is not the same as protecting the price of fuels,” he said, according to Premium Times and Channels Television. <Cite refs={[“turn847588view0″,”turn847588view1”]}/>

The IMF official was responding to a question about the impact of rising energy prices on Nigeria, where higher petrol costs have increased transport expenses and added to concerns about inflation and poverty.

He said subsidies and other measures that prevent energy prices from fully reflecting market conditions had cost countries between one and 1.5 per cent of gross domestic product in 2026.

Valdés argued that governments could achieve better results by using social safety nets and household data to identify people who needed assistance rather than subsidising fuel prices for all consumers.

The Fund’s position is that temporary and targeted cash transfers can protect low-income households when the prices of essential goods rise, while reducing pressure on public finances.

Under this approach, governments allow fuel prices to reflect market conditions but provide assistance to households most affected by the increase.

The IMF has also warned that blanket subsidies can disproportionately benefit wealthier consumers because they generally consume more fuel, while diverting public resources from healthcare, education, infrastructure and targeted social protection.

In its June 2026 assessment of Nigeria’s economy, the Fund urged the government to maintain its commitment not to reintroduce fuel subsidies and recommended temporary, targeted support through the cash-transfer system.

The IMF’s latest comments come as the Federal Government faces pressure to ease the burden of rising fuel prices on households and businesses.

The Nigerian National Petroleum Company Limited recently introduced a temporary petrol discount at its retail outlets as part of efforts to cushion consumers against higher energy costs. The measure was announced as a 30-day initiative, with public transport operators among those prioritised for relief.

The government has maintained that the temporary discount does not amount to a return to the former blanket subsidy regime.

Nigeria removed its longstanding petrol subsidy in May 2023 under President Bola Tinubu, arguing that the policy placed an unsustainable burden on public finances. The removal, however, contributed to higher transport and living costs, making fuel pricing a persistent economic and political issue.

The debate has intensified ahead of the next presidential election, scheduled for January 2027, as opposition figures have called for changes to the current fuel-pricing arrangement.

The IMF’s position highlights the challenge facing the Federal Government: maintaining fiscal discipline while protecting Nigerians from the effects of higher energy prices.

Although a blanket subsidy may reduce the amount consumers pay at the pump, it can require substantial public spending or create financial obligations elsewhere in the energy sector.

Targeted assistance, by contrast, seeks to direct limited resources towards households most affected by higher prices. Its effectiveness, however, depends on accurate household data, transparent beneficiary selection and the timely delivery of support.

For Nigeria, the central question remains how to provide meaningful relief to households and businesses without reversing reforms intended to reduce fiscal pressures and improve the sustainability of public finances.