The International Monetary Fund (IMF) has advised the Federal Government against restoring a broad petrol subsidy, recommending targeted assistance for vulnerable households as rising energy prices put additional pressure on Nigerians.

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 IMF-World Bank Annual Meetings in Bangkok, Thailand. His remarks followed a question about the impact of higher fuel prices on transport costs, inflation and poverty in Nigeria, particularly amid calls for renewed government intervention ahead of the 2027 general elections.

Valdés argued that broad fuel subsidies are costly, can disproportionately benefit higher-income consumers and leave governments with less money for other priorities. He stressed that protecting vulnerable people should not necessarily mean keeping fuel prices artificially low, advocating instead for assistance directed at households most affected by rising living costs.

The IMF official 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. The figure was presented as a broader estimate and should not be interpreted as the specific fiscal cost of petrol subsidies in Nigeria.

The Fund recommended using social safety nets and household data to identify people who need support, rather than relying on universal fuel-price subsidies. Such targeted interventions, it argued, could help cushion the impact of higher energy costs while limiting pressure on public finances.

The Federal Government recently announced a temporary petrol discount at Nigerian National Petroleum Company Limited retail outlets as part of measures to ease the burden of rising fuel prices. NNPC said the discount would continue until October 31, 2026, describing it as a customer-relief initiative rather than a return to the former petrol subsidy system.

The IMF’s position places renewed attention on how Nigeria can balance market-based fuel pricing with measures to protect households from higher transport and living costs. The debate is likely to remain significant as the government weighs demands for relief against fiscal pressures and the need to sustain its economic reforms.