Fiscal And Welfare Impacts Of Electricity Subsidies In Central America

Author : Marco Antonio Hernández Oré,Luis à?lvaro Sánchez,Liliana D. Sousa,Leopoldo Tornarolli
Publisher : World Bank Publications
Page : 218 pages
File Size : 46,9 Mb
Release : 2017-10-23
Category : Business & Economics
ISBN : 9781464811050

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Fiscal and Welfare Impacts of Electricity Subsidies in Central America by Marco Antonio Hernández Oré,Luis à?lvaro Sánchez,Liliana D. Sousa,Leopoldo Tornarolli Pdf

Central American countries spend approximately one percent of their aggregate gross domestic product subsidizing residential electricity consumption. This amount is comparable with what these countries spend on education and social assistance. The pressure that electricity subsidies exert on government budgets is particularly high when international energy prices rise. Electricity subsidies also provide perverse incentives for the overconsumption of electricity as households do not pay the true cost of their consumption, which in turn reduces incentives to increase energy efficiency. This book answers key questions regarding residential electricity subsidies in Central America. In particular: How do the subsidy mechanisms function in each country? What are their fiscal costs? Are these subsidies good value for the money? How efficient are subsidies in reaching households in need, and what drives this efficiency? What are the reform options? The main message of this book is that there is considerable scope for improving the efficiency of electricity subsidies in Central America by better targeting them to low-income households. The book shows that electricity subsidies help reduce the burden of electricity costs on the lowest-income groups. However, the existing electricity subsidy schemes are very inefficient at targeting resources to low-income households, with the majority of government spending going to higher-income households. Indeed, most countries in the region have the opportunity to significantly reduce the fiscal costs of electricity subsidies without imposing significant costs on households, particularly poor households. Given the limited fiscal space in the region and the major needs of the countries in terms of social services and physical infrastructure, this study seeks to provide Central American policymakers with the analytical foundations necessary to assess the costs and benefits of their electricity subsidy mechanisms, and design effective reform strategies that reflect their unique circumstances and policy priorities.

Author : Mr.Gabriel Di Bella,Mr.Lawrence Norton,Mr.Joseph Ntamatungiro,Ms.Sumiko Ogawa,Issouf Samaké,Marika Santoro
Publisher : International Monetary Fund
Page : 79 pages
File Size : 46,5 Mb
Release : 2015-02-12
Category : Business & Economics
ISBN : 9781484365366

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Energy Subsidies in Latin America and the Caribbean by Mr.Gabriel Di Bella,Mr.Lawrence Norton,Mr.Joseph Ntamatungiro,Ms.Sumiko Ogawa,Issouf Samaké,Marika Santoro Pdf

The oil price decline creates an opportunity to dismantle energy subsidies, which escalated with high oil prices. This paper assesses energy subsidies in Latin America and the Caribbean—about 1.8 percent of GDP in 2011–13 (approximately evenly split between fuel and electricity), and about 3.8 percent of GDP including negative externalities. Countries with poorer institutions subsidize more. Energy-rich countries subsidize fuel more, but low-income countries are more likely to subsidize electricity, as are Central America and the Caribbean. Energy subsidies impose fiscal costs, hurting SOEs, competitiveness, and distribution. The paper overviews country experience with subsidy reform, drawing lessons.

Author : Guillermo Beylis,Barbara Cunha
Publisher : World Bank Publications
Page : 230 pages
File Size : 53,5 Mb
Release : 2017-10-02
Category : Business & Economics
ISBN : 9781464811128

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Energy Pricing Policies for Inclusive Growth in Latin America and the Caribbean by Guillermo Beylis,Barbara Cunha Pdf

Government strategies for setting energy prices are not uniform across the Latin America and the Caribbean (LAC) region—or even across fuels. Instead, they cover a full spectrum, ranging from discretionary price-fixing at one end to pure market-based approaches at the other. In between is a wide variety of other schemes such as price stabilization funds, import or export parity pricing, price smoothing through tax levels, and targeted direct price subsidies or vouchers. Governments in the LAC region, however, tend to be small as measured by government revenues as a percentage of GDP. So their limited government resources have to be used wisely and be better targeted to the poor and vulnerable. Although energy subsidies are an inefficient policy tool for protecting the welfare of the poor, energy price increases can have a big impact on these households. Energy Pricing Policies for Inclusive Growth in Latin America and the Caribbean finds that energy subsidies are highly regressive in an absolute sense—that is, the lion’s share of every dollar spent on keeping energy prices low benefits wealthier households. However, subsidies for fuels that are widely used for cooking and heating—liquefied petroleum gas (LPG), natural gas, and kerosene—as well as for electricity, can be relatively neutral or progressive, implying that lower-income households capture benefits that are proportionate to their expenditures. In other words, although poorer households receive very little from every dollar spent on energy subsidies, that small amount may represent an important share of their expenditures. It is important, then, that governments expand the coverage and depth of their social safety nets to provide relief for poor households if energy prices rise. This report also finds that aggregate price impacts and the competitiveness effects of energy price increases are moderate to small and can be smoothed out through macropolicy responses.

Author : International Monetary Fund. Fiscal Affairs Dept.
Publisher : International Monetary Fund
Page : 119 pages
File Size : 45,8 Mb
Release : 2013-01-28
Category : Business & Economics
ISBN : 9781498342407

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Case Studies on Energy Subsidy Reform—Lessons and Implications - Supplement by International Monetary Fund. Fiscal Affairs Dept. Pdf

This supplement presents country case studies reviewing energy subsidy reform experiences, which are the basis for the reform lessons identified in the main paper. The selection of countries for the case studies reflects the availability of data and of previously documented evidence on country-specific reforms. The 22 country case studies were also chosen to provide cases from all regions and a mix of outcomes from reform. The studies cover 19 countries, including seven from sub-Saharan Africa, two in developing Asia, three in the Middle East and North Africa, four in Latin America and the Caribbean, and three in Central and Eastern Europe and the CIS. The case studies are organized by energy product, with 14 studies of the reform of petroleum product subsidies, seven studies of the reform of electricity subsidies, and a case study of subsidy reform for coal. The larger number of studies on fuel subsidies reflects the wider availability of data and past studies for these reforms. The structure of each case study is similar, with each one providing the context of the reform and a description of the reforms; discussion of the impact of the reform on energy prices or subsidies and its success or failure; mitigating measures that were implemented in an attempt to generate public support for the reform and offset adverse effects on the poor; and, finally, identification of lessons for designing reforms.

Author : Gabriel Di Bella
Publisher : Unknown
Page : 79 pages
File Size : 46,9 Mb
Release : 2015
Category : Electronic
ISBN : OCLC:907567340

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Energy Subsidies in Latin America and the Caribbean by Gabriel Di Bella Pdf

Author : Mr.David Coady,Mr.Javier Arze del Granado
Publisher : International Monetary Fund
Page : 25 pages
File Size : 51,9 Mb
Release : 2010-09-01
Category : Business & Economics
ISBN : 9781455205325

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The Unequal Benefits of Fuel Subsidies by Mr.David Coady,Mr.Javier Arze del Granado Pdf

This paper reviews evidence on the impact of fuel subsidy reform on household welfare in developing countries. On average, the burden of subsidy reform is neutrally distributed across income groups; a $0.25 decrease in the per liter subsidy results in a 6 percent decrease in income for all groups. More than half of this impact arises from the indirect impact on prices of other goods and services consumed by households. Fuel subsidies are a costly approach to protecting the poor due to substantial benefit leakage to higher income groups. In absolute terms, the top income quintile captures six times more in subsidies than the bottom. Issues that need to be addressed when undertaking subsidy reform are also discussed, including the need for a new approach to fuel pricing in many countries.

Author : Mr.David Coady,Valentina Flamini,Louis Sears
Publisher : International Monetary Fund
Page : 25 pages
File Size : 49,7 Mb
Release : 2015-11-25
Category : Business & Economics
ISBN : 9781513501390

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The Unequal Benefits of Fuel Subsidies Revisited by Mr.David Coady,Valentina Flamini,Louis Sears Pdf

Understanding who benefits from fuel price subsidies and the welfare impact of increasing fuel prices is key to designing, and gaining public support for, subsidy reform. This paper updates evidence for developing countries on the magnitude of the welfare impact of subsidy reform and its distribution across income groups, incorporating more recent studies and expanding the number of countries. These studies confirm that a very large share of benefits from price subsidies goes to high-income households, further reinforcing existing income inequalities. The results can also help to approximate the welfare impact of subsidy reform for countries where the data necessary for such an analysis is not available.

Author : Ian Parry,Mr. Simon Black,Nate Vernon
Publisher : International Monetary Fund
Page : 42 pages
File Size : 51,8 Mb
Release : 2021-09-24
Category : Business & Economics
ISBN : 9781513595405

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Still Not Getting Energy Prices Right: A Global and Country Update of Fossil Fuel Subsidies by Ian Parry,Mr. Simon Black,Nate Vernon Pdf

This paper provides a comprehensive global, regional, and country-level update of: (i) efficient fossil fuel prices to reflect their full private and social costs; and (ii) subsidies implied by mispricing fuels. The methodology improves over previous IMF analyses through more sophisticated estimation of costs and impacts of reform. Globally, fossil fuel subsidies were $5.9 trillion in 2020 or about 6.8 percent of GDP, and are expected to rise to 7.4 percent of GDP in 2025. Just 8 percent of the 2020 subsidy reflects undercharging for supply costs (explicit subsidies) and 92 percent for undercharging for environmental costs and foregone consumption taxes (implicit subsidies). Efficient fuel pricing in 2025 would reduce global carbon dioxide emissions 36 percent below baseline levels, which is in line with keeping global warming to 1.5 degrees, while raising revenues worth 3.8 percent of global GDP and preventing 0.9 million local air pollution deaths. Accompanying spreadsheets provide detailed results for 191 countries.

Author : Mr.Trevor Serge Coleridge Alleyne,Mr.Mumtaz Hussain
Publisher : International Monetary Fund
Page : 125 pages
File Size : 45,9 Mb
Release : 2013-08-12
Category : Business & Economics
ISBN : 9781484366547

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Energy Subsidy Reform in Sub-Saharan Africa by Mr.Trevor Serge Coleridge Alleyne,Mr.Mumtaz Hussain Pdf

The reform of energy subsidies is an important but challenging issue for sub-Saharan African (SSA) countries. There is a relatively large theoretical and empirical literature on this issue. While this paper relies on that literature, too, it tailors its discussion to SSA countries to respond to the following questions: Why it is important to reduce energy subsidies? What are the difficulties involved in energy subsidy reform? How best can a subsidy reform be implemented? This paper uses various sources of information on SSA countries: quantitative assessments, surveys, and individual (but standardized) case studies.

Author : Kristin Komives,World Bank
Publisher : World Bank Publications
Page : 308 pages
File Size : 55,9 Mb
Release : 2005
Category : Business & Economics
ISBN : 0821363425

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Water, Electricity, and the Poor by Kristin Komives,World Bank Pdf

This book reviews the prevalence and variants of consumer subsidies found in the developing world and the effectiveness of these subsidies for the poor. It places consumer subsidies in a broader social protection framework and compares them with poverty-focused programmes in other sectors using a common metric. It concludes that the most common subsidy instruments perform poorly in comparison with most other transfer mechanisms. Alternative consumption and connection subsidy mechanisms show more promise, especially when combined with complementary non-price approaches to making utility services accessible and affordable to poor households. The many factors contributing to those outcomes are dissected, identifying those that can be controlled and used to improve performance.

Author : Mr.Carlo A. Sdralevich,MissRanda Sab,Mr.Younes Zouhar,Ms.Giorgia Albertin
Publisher : International Monetary Fund
Page : 130 pages
File Size : 55,6 Mb
Release : 2014-07-09
Category : Technology & Engineering
ISBN : 9781498348461

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Subsidy Reform in the Middle East and North Africa by Mr.Carlo A. Sdralevich,MissRanda Sab,Mr.Younes Zouhar,Ms.Giorgia Albertin Pdf

In the Middle East and North Africa (MENA) countries price subsidies are common, especially on food and fuels. However, these are neither well targeted nor cost effective as a social protection tool, often benefiting mainly the better off instead of the poor and vulnerable. This paper explores the challenges of replacing generalized price subsidies with more equitable social safety net instruments, including the short-term inflationary effects, and describes the features of successful subsidy reforms.

Author : Mr.Benedict J. Clements,Mr.David Coady,Ms.Stefania Fabrizio,Mr.Sanjeev Gupta,Mr.Trevor Serge Coleridge Alleyne,Mr.Carlo A Sdralevich
Publisher : International Monetary Fund
Page : 390 pages
File Size : 52,5 Mb
Release : 2013-09-13
Category : Business & Economics
ISBN : 9781484339169

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Energy Subsidy Reform by Mr.Benedict J. Clements,Mr.David Coady,Ms.Stefania Fabrizio,Mr.Sanjeev Gupta,Mr.Trevor Serge Coleridge Alleyne,Mr.Carlo A Sdralevich Pdf

Energy subsidies are aimed at protecting consumers, however, subsidies aggravate fiscal imbalances, crowd out priority public spending, and depress private investment, including in the energy sector. This book provides the most comprehensive estimates of energy subsidies currently available for 176 countries and an analysis of “how to do” energy subsidy reform, drawing on insights from 22 country case studies undertaken by the IMF staff and analyses carried out by other institutions.

Author : Gabriela Inchauste,David G. Victor
Publisher : World Bank Publications
Page : 270 pages
File Size : 52,6 Mb
Release : 2017-03-22
Category : Business & Economics
ISBN : 9781464810084

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The Political Economy of Energy Subsidy Reform by Gabriela Inchauste,David G. Victor Pdf

This book proposes a simple framework for understanding the political economy of subsidy reform and applies it to four in-depth country studies covering more than 30 distinct episodes of reform. Five key lessons emerge. First, energy subsidies often follow a life cycle, beginning as a way to stabilize prices and reduce exposure to price volatility for low-income consumers. However, as they grow in size and political power, they become entrenched. Second, subsidy reform strategies vary because the underlying political economy problems vary. When benefits are concentrated, satisfying (or isolating) interest groups with alternative policies is an important condition for effective reform. When benefits are diffuse, it can be much harder to identify and manage the political coalition needed for reform. Third, governments vary in their administrative and political capacities to implement difficult energy subsidy reforms. Fourth, improvements in social protection systems are often critical to the success of reforms because they make it possible to target assistance to those most in need. Finally, the most interesting cases involve governments that take a strategic approach to the challenges of political economy. In these settings, fixing energy subsidies is central to the governments’ missions of retaining political power and reorganizing how the government delivers benefits to the population. These cases are examples of “reform engineering,†? where governments actively seek to create the capacity to implement alternative policies, depoliticize tariffs, and build credibility around alternative policies. The most successful reforms involve active efforts by policy leaders to identify the political forces supporting energy subsidies and redirect or inoculate them.

Author : Verena Fritz,Brian Levy,Rachel Ort
Publisher : World Bank Publications
Page : 289 pages
File Size : 44,7 Mb
Release : 2014-01-13
Category : Business & Economics
ISBN : 9781464801228

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Problem-Driven Political Economy Analysis by Verena Fritz,Brian Levy,Rachel Ort Pdf

This volume presents eight good practice examples of problem-driven political economy analysis conducted at the World Bank, and reflect what the Bank has so far been able to achieve in mainstreaming this approach into its operations and policy dialogue.

Author : Antonio Estache,Vivien Foster,Quentin Wodon
Publisher : World Bank Publications
Page : 136 pages
File Size : 51,8 Mb
Release : 2002
Category : Political Science
ISBN : 0821350390

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Accounting for Poverty in Infrastructure Reform by Antonio Estache,Vivien Foster,Quentin Wodon Pdf

Annotation This book provides practical guidelines and options for infrastructure reform that result in access and affordability for the poor. It includes a new model for reform that consists of three main components - policies, regulation, and provision which when properly balanced minimize the risks associated with reform.