The Director of the IMF’s Fiscal Affairs Department, Rodrigo Valdés, gave the advice during a press briefing on the Fiscal Monitor at the 2026 Annual Meetings of the IMF and World Bank in Bangkok.
Valdés said blanket fuel subsidies were expensive, often benefited higher-income consumers disproportionately and increased fiscal pressures, particularly amid rising borrowing costs.
His comments followed a question about how the IMF could recommend allowing energy prices to reflect scarcity when higher petrol prices in Nigeria could increase transport costs, worsen inflation and deepen poverty, particularly as calls grow for the restoration of fuel subsidies ahead of an election year.
“Protecting people is not the same as protecting the price of fuels,” Valdés said.
He explained that fuel subsidies and other measures preventing prices from fully adjusting to energy shocks had cost countries between one and 1.5 per cent of gross domestic product (GDP) in 2026.
Rather than maintaining a general subsidy, the IMF official urged governments to strengthen social safety nets and use household data to identify people who genuinely needed support.
According to him, targeted interventions would help protect vulnerable citizens without placing an excessive burden on public finances.
The IMF’s position comes amid continued debate in Nigeria over rising petrol prices and the cost-of-living crisis, with some stakeholders calling on the government to reconsider the removal of the fuel subsidy.
The Federal Government recently announced a 30-day petrol discount at Nigerian National Petroleum Company Limited retail stations, with priority given to public transport operators, to cushion the impact of rising fuel prices.
The initiative is intended to provide temporary relief to transport operators and commuters as the government continues to face pressure to address the effects of higher energy costs on households and businesses.
The IMF’s recommendation underscores the need to balance the economic benefits of allowing fuel prices to reflect market conditions with measures that protect low-income households from the effects of rising living costs.
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