Energy Subsidies in Latin America and the Caribbean: Stocktaking and Policy Challenges

By Gabriel Di Bella, Lawrence Norton, Joseph Ntamatungiro, Sumiko Ogawa, Issouf Samaké, Marika Santoro

February 12, 2015

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Gabriel Di Bella, Lawrence Norton, Joseph Ntamatungiro, Sumiko Ogawa, Issouf Samaké, and Marika Santoro. Energy Subsidies in Latin America and the Caribbean: Stocktaking and Policy Challenges, (USA: International Monetary Fund, 2015) accessed December 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

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.

Subject: Commodities, Electricity, Energy subsidies, Expenditure, Fuel prices, Oil prices, Prices, Tariffs, Taxes

Keywords: Authorities time, Caribbean, Central America, Country authorities, Discretionary government intervention, Distribution company, Electricity, Electricity subsidy, Energy Subsidies, Energy subsidy, Financing regime, Fiscal Policy, Fuel prices, Fuel subsidy, Further government transfer, Global, Hydro generator, LAC country, Latin America and the Caribbean, Low income, Oil prices, Oil-producer country, Stabilization fund, State oil firm, Tariffs, WP

Publication Details

Pages:

79
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2015/030
Stock No:

WPIEA2015030
ISBN:

9781484365366
ISSN:

1018-5941

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