IMF Rejects Nigeria Fuel Subsidy Comeback

(Rodrigo Valdés. Photo Credit: Reuter)
The IMF has advised Nigeria not to bring back blanket petrol subsidies as fuel prices rise.

It recommends targeted help for vulnerable households instead.

The advice came at the IMF and World Bank annual meetings in Bangkok.

Rodrigo Valdés, director of the IMF's Fiscal Affairs Department, said blanket subsidies are expensive and mostly benefit richer people.

"Protecting people is not the same as protecting the price of fuels," he said.

He warned that subsidies can worsen government finances and stop demand from adjusting when supply is tight.

He said measures that stop fuel prices from reflecting energy shocks cost countries between 1 and 1.5 percent of GDP in 2026.

He urged governments to use social safety nets and household data to find people who need help.

Davide Furceri, a division chief at the department, suggested moving subsidy money into targeted support.

This could include transport aid, school feeding and help for poor farmers.

He said bus fares could be subsidised instead of petrol for everyone.

He also said countries without the systems for targeted help should use temporary alternatives.

The advice comes as the Federal Government starts a 30 day petrol discount at NNPC retail stations, with public transport operators first in line.

Finance Minister Taiwo Oyedele said NNPC retail will sell petrol at cost by giving up its profit margin.

He called it temporary relief, not a return to subsidy.

The government has also proposed negotiating a ceiling of N1,350 per litre on petrol's ex-gantry price.