Support Vulnerable Household, Don’t Return Petrol Subsidy, IMF Advises Tinubu

By Molayo Anjorin

The International Monetary Fund (IMF) has warned the President Bola Tinubu led Federal Government not to restore petrol subsidies.

Rodrigo Valdés, IMF Director of Fiscal Affairs Department made this call during an online press briefing on the Fiscal Monitor on Wednesday, in the IMF and World Bank Group Annual Meetings in Bangkok, Thailand.

This calls follow the push by opposition Presidential Candidates including Atiku Abubakar and Gbenga Hashim promising to restore fuel subsidy, if elected during 2027 general elections.

Valdes said blanket subsidies on fuel pose a huge cost to the budget, and tend to benefit wealthier consumers more than the poor.

He said in the coming years, governments that continue to subsidize fuel and keep prices below market levels will find such policies would eat up one to 1.5 per cent of their gross domestic product in 2026.

The IMF Director noted that despite the understanding of the adverse effects of removal of petrol subsidies, many governments were faced with the dilemma of balancing the impact of the rising cost of fuel on transport fares and prices of goods and services.

However, he recommended that governments cushion the poor against the impact of soaring fuel prices by using fiscal resources to create or expand social safety nets.

According to Valdés, blanket subsidies are regressive and ineffective, noting that they may even suppress demand for fuels, distorting consumption patterns at times of scarcity and putting further upward pressure on prices.

The IMF’s warning against revival of petrol subsidies comes as Nigerians demand that the government reopen petrol subsidies ahead of the 2027 elections.

Meanwhile, the Federal Government announced a resumption of a one-month petrol discount at Nigerian National Petroleum Company Limited (NNPCL) outlets in an effort to cushion the impacts of the fuel price rise on the masses.

The Finance Minister, Taiwo Oyedele, said the government would allow the NNPCL to sell petrol at cost in its stations, citing a withdrawal of the retails margin by the company.

He described the gesture as a “limited relief measure” and not a resumption of petrol subsidy.