The Director of the IMF’s Fiscal Affairs Department, Rodrigo Valdés, made the recommendation during a press briefing on the Fiscal Monitor at the 2026 IMF and World Bank Annual Meetings 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 the impact of allowing energy prices to reflect scarcity, especially in Nigeria, where rising petrol prices could increase transportation costs, worsen inflation and deepen poverty.
Responding to concerns about calls for the government to restore petrol subsidies ahead of an election year, Valdés said protecting citizens did not necessarily require keeping fuel prices artificially low.
“Protecting people is not the same as protecting the price of fuels,” he said.
According to the IMF official, fuel subsidies and other measures that prevent energy prices from fully adjusting to supply shocks cost countries between one and 1.5 per cent of their gross domestic product in 2026.
He recommended that governments strengthen social safety nets and use household data to identify people who need assistance, rather than subsidising fuel prices across the board.
The Federal Government recently announced a 30-day petrol discount at Nigerian National Petroleum Company Limited retail stations to ease the impact of rising fuel prices, with public transport operators given priority under the initiative.
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