The International Monetary Fund (IMF) on Wednesday warned against blanket subsidies, saying targeted support for vulnerable and poor people gives higher outcomes.
Rodrigo Valdés, Director of the IMF’s Fiscal Affairs Department, spoke throughout a press briefing on the fund’s fiscal monitor on the 2026 annual conferences of the IMF and World Bank in Bangkok, Thailand.
The fund stated that, past being costly, blanket petrol subsidies typically profit higher-income customers disproportionately and will worsen fiscal pressures amid rising debt and borrowing prices.
“Protecting people is not the same as protecting the price of fuels,” Mr Valdés stated.
“It’s first fiscally very costly, and second, if you look at the pattern of consumption, it’s easy to see that that subsidy is readily regressive in many places.”
Mr Valdes spoke in response to a query on how the IMF may advocate power costs to mirror shortage when larger gas costs in Nigeria and another international locations have led to larger value of dwelling, elevated transport prices, worsening inflation, and poverty.
The IMF official stated gas subsidies or measures stopping costs from adjusting absolutely to an power shock had value international locations between 1 per cent and 1.5 per cent of gross home product (GDP) in 2026.
He known as on governments internationally to as an alternative use social security nets and family information to determine people who want help.
“There are better tools to deal with this,” he stated.
The fund’s intervention is in keeping with its long-standing place on subsidy, as not too long ago canvassed in a current report.
“Targeted and temporary transfers are the most effective and cost-efficient way to protect poorer households when prices for basics spike,” fund stated in its report.
“This approach directly supports those who need it most, preserves scarce fiscal space, and allows high market prices to continue signalling scarcity, encouraging consumers to reduce consumption if they can.”
READ ALSO: Targeted support, not subsidies, can best protect people when inflation surges IMF
Local Debates
Debates over the propriety of gas subsidy has been on the centre of discussions in Nigeria in current weeks, forward of a vital election slated for January.
While the Nigerian authorities, led by President Bola Tinubu, has defended its financial coverage of subsidy elimination as important to the nation’s fiscal survival, opposition politicians—akin to Atiku Abubakar of the ADC and Peter Obi of the NDC—have canvassed for and promised a return to totally different subsidy preparations if elected into energy.
Discover extra from Premium Times Nigeria
Subscribe to get the newest posts despatched to your e mail.
