‘It’s Regressive’ – IMF warns Nigeria against restoring petrol subsidy
The International Monetary Fund (IMF) has advised Nigeria against restoring broad petrol subsidies, recommending targeted financial assistance and social protection programmes to cushion vulnerable households against…
Nigeria ended decades of petrol subsidy in mid-2023, a move that sharply raised pump prices and fuelled inflation but was credited with easing pressure on government finances and freeing up funds for other spending. The subsidy regime had long been criticised for its opacity and cost, with successive governments spending trillions of naira annually to keep fuel prices artificially low, even as reports of fraud and leakages persisted. Since its removal, however, the sharp rise in transport and energy costs has squeezed households and businesses, reviving public and political pressure for the government to bring back some form of subsidy.
The IMF's latest intervention weighs in on that debate, cautioning against reversing the reform. The Fund's position reflects a broader argument among economists that blanket fuel subsidies disproportionately benefit wealthier Nigerians who consume more fuel, while straining public finances already under pressure from high debt-servicing costs. Instead, the IMF is pushing for targeted cash transfers and social protection schemes aimed squarely at low-income households. The coverage across outlets is largely uniform, each reporting the same advisory, though none detail specifics on what new targeted relief programmes might look like, their funding, or a timeline for implementation.