The International Monetary Fund (IMF) has advised the Federal Government not to restore the general petrol subsidy, urging it to provide direct support to vulnerable Nigerians struggling with rising energy costs.
The IMF said the government should focus on helping low income households rather than keeping petrol prices artificially low for everyone.
The advice comes amid growing debate over the possible return of fuel subsidy ahead of the 2027 general elections. While the Federal Government has maintained that there is no plan to restore the subsidy, former Vice President Atiku Abubakar, the presidential candidate of the African Democratic Congress (ADC), has proposed bringing it back. Speaking on Wednesday at the 2026 annual meetings of the IMF and World Bank in Bangkok, Thailand, Rodrigo Valdés, director of the IMF’s Fiscal Affairs Department, said broad fuel subsidies were expensive and often benefited wealthier people more than poorer households.
He explained that such subsidies could also increase government spending pressures, especially when borrowing costs were rising.
‘Protecting people is not the same as protecting the price of fuels,’ Valdés said.
According to him, fuel subsidies and measures that prevent energy prices from reflecting market conditions cost countries between one and 1.5 per cent of their gross domestic product in 2026.
He advised governments to use social welfare programmes and household data to identify people who genuinely need financial assistance.
‘There are better tools to deal with this,’ he said.
Economist urges FG to question IMF advice
However, an economist, Professor Ndubisi Nwokoma, has urged the Federal Government to carefully examine the IMF’s recommendations instead of accepting them without question.
Nwokoma said subsidy removal could improve government finances, but the government must explain how the money saved is being spent to improve Nigerians’ living conditions.
He argued that the main concern was not simply whether the subsidy should be removed, but how the savings were managed and whether ordinary Nigerians were benefiting.
‘There is nothing fundamentally wrong with removing the subsidy. However, it is not compulsory that it must be removed,’ he said.
The economist noted that countries such as the United States and members of the European Union operate different forms of subsidies to support their economies and citizens.
He said many Nigerians were still struggling with rising living costs despite the removal of the petrol subsidy, raising questions about how the government was using the additional revenue.
Nwokoma also criticised the high cost of governance and government spending on projects he considered unnecessary while households continued to face economic hardship.
‘The ordinary man is getting poorer, while the public sector is getting richer. The money is not trickling down to the people. That is the problem,’ he said.
He urged the IMF to pay greater attention to accountability and the effective use of public funds, rather than focusing mainly on subsidy removal.
Nwokoma added that Nigeria should assess the IMF’s recommendations based on the country’s economic conditions and national interests.
CPPE backs subsidy removal
Meanwhile, the Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, supported the IMF’s position.
Yusuf said the removal of the petrol subsidy was a necessary economic reform and warned that restoring a general subsidy could put pressure on government finances.
He explained that bringing back the subsidy could create additional financial challenges for a country already dealing with infrastructure deficits, debt payments and other development needs.
However, he said temporary and targeted assistance to cushion the impact of rising energy costs should not automatically be seen as a reversal of the government’s economic reforms.
Yusuf added that investors were more concerned about predictable government policies, access to markets, business opportunities and financial stability.
He said limited emergency support would not necessarily damage investor confidence, provided the government did not impose prices that made it difficult for private petroleum marketers to operate.
Another expert, Robert Femi, said restoring the fuel subsidy was no longer feasible and argued that some politicians supporting its return might be motivated by political interests.
He said Nigerians had seen some benefits from the removal, although the policy had also caused hardship.
Femi urged the government to introduce measures that would reduce the suffering of citizens affected by the policy.
NLC demands review of subsidy removal
The Nigeria Labour Congress (NLC) has continued to oppose the removal of the petrol subsidy, describing the policy as anti-people.
The labour union argued that the removal had failed to deliver the promised savings and improvements in local refining, calling for the policy to be reversed or significantly reviewed.
NLC President Joe Ajaero also criticised the IMF and the World Bank, accusing the institutions of promoting harsh economic policies that had worsened the difficulties faced by Nigerians.
He rejected the argument that subsidy removal was solely a domestic decision, insisting that international financial institutions should not support policies that increase hardship for citizens.