IMF Advises Nigeria on Fuel Subsidy Policy Amid 2027 Elections

The IMF Fiscal Affairs Department director, Rodrigo Valdés, stated that Nigeria should avoid reinstating broad petrol subsidies. The fund recommends targeted financial assistance and social protection programs to protect vulnerable households from rising energy costs.

Valdés explained that blanket fuel subsidies were fiscally costly, disproportionately benefited higher-income consumers, and risked worsening public finance pressures as borrowing costs rose. He noted that such subsidies cost countries between one and 1.5 per cent of gross domestic product in 2026, a figure tied to supply shocks and energy price adjustments.

The director addressed concerns about Nigeria’s potential restoration of petrol subsidies ahead of the 2027 general elections, emphasizing that rising petrol prices could increase transportation costs, fuel inflation, and deepen poverty. This context arises from the 2026 IMF-World Bank Annual Meetings in Bangkok, where Valdés provided the Fiscal Monitor update.