IMF Advises Nigeria on Fuel Subsidy Strategy Ahead of 2027 Elections

The International Monetary Fund (IMF) has cautioned Nigeria’s federal government against reinstating broad-based petrol subsidies, noting that maintaining low fuel prices could intensify fiscal strain as the nation prepares for the 2027 general elections. Rodrigo Valdés, director of the IMF’s Fiscal Affairs Department, stated this during the 2026 IMF and World Bank Annual Meetings in Bangkok.

Valdés emphasized that shielding households from energy price volatility does not necessitate keeping fuel prices artificially low for all consumers. He estimated that fuel subsidies and similar policies costing countries 1 per cent to 1.5 per cent of gross domestic product in 2026 undermine fiscal stability, especially as borrowing costs increase.

The IMF official warned that universal subsidies disproportionately aid higher-income groups and reduce government fiscal flexibility. Instead, he proposed targeting social safety nets and household data to assist those most vulnerable to rising energy costs.