The International Monetary Fund (IMF) has warned the Federal Government against returning to a blanket petrol subsidy, urging the President Bola Tinubu administration to channel support directly to vulnerable Nigerians instead.
The IMF said a general fuel subsidy would place additional pressure on government finances while disproportionately benefiting wealthier consumers who use more petrol. 
The warning comes amid growing concerns over the impact of high petrol prices on transportation costs, inflation and household purchasing power, as pressure mounts on the government to provide relief ahead of the 2027 general elections.
The Director of the IMF’s Fiscal Affairs Department, Rodrigo Valdés, gave the advice on Wednesday during a briefing on the fund’s Fiscal Monitor at the 2026 annual meetings of the IMF and World Bank in Bangkok, Thailand.
Valdés stressed that protecting vulnerable citizens should not be equated with keeping fuel prices artificially low.
“Protecting people is not the same as protecting the price of fuels,” he said, advocating direct support for households most affected by rising energy costs.
According to him, government interventions aimed at preventing energy prices from reflecting market conditions cost countries between one and 1.5 per cent of gross domestic product in 2026.
He warned that such measures could become a significant burden on public finances, particularly at a time when governments are facing higher borrowing costs.
The IMF instead recommended expanding social protection programmes and using reliable household data to identify Nigerians most affected by higher fuel prices.
The fund’s Fiscal Affairs Department Division Chief, Davide Furceri, suggested measures such as subsidising public transport fares, expanding school feeding programmes and supporting vulnerable farmers.
The recommendations come against the backdrop of the Federal Government’s decision to introduce temporary relief measures following the sharp increase in petrol prices.
The government recently announced a 30-day petrol discount at Nigerian National Petroleum Company Limited filling stations, with public transport operators prioritised under the arrangement.
Finance Minister Taiwo Oyedele said the measure was designed as temporary relief, explaining that the NNPC would sell petrol at cost by foregoing its retail profit margin.
The government has also proposed a monthly review of the N1,350-per-litre ceiling on petrol’s ex-gantry, or landing, cost.
The IMF’s position effectively puts the focus on targeted intervention rather than a return to the broad-based subsidy regime that previously consumed significant government resources.
The fund maintained that direct assistance to vulnerable households would provide more effective relief while protecting public finances from the potentially heavy cost of a universal fuel subsidy.
