Energy subsidies in the Middle East and North Africa

Fattouh, Bassam; El-Katiri, Laura

Abstract

The policy of maintaining tight control of domestic energy prices has been widely spread in the Middle East and North Africa. Energy subsidies that keep domestic energy prices below market prices serve as a strategic tool to promote industrialization and diversification, to protect the income of citizens, and to distribute state benefits to the population. However, whilst they may be seen as achieving some of these objectives, this paper argues they do so in a costly and highly inefficient way. Energy subsidies distort price signals and lead to a systemic misallocation of resources. They also tend to be regressive, and the mounting fiscal burden they cause makes them increasingly unsustainable from a budgetary point of view. For this reason, a reform of energy pricing is in many MENA countries increasingly unavoidable e despite being a politically and economically delicate task. The diversity of MENA suggests that no single reform agenda will fit all countries in the region equally.

Citation

Fattouh, B., & El-Katiri, L. (2013). Energy subsidies in the Middle East and North Africa. Energy Strategy Reviews, 2(1), 108-115. https://doi.org/10.1016/j.esr.2012.11.004

• Journal Article Type: Article
• Publication Date: Jun 1, 2013
• Deposit Date: Jun 21, 2013
• Journal: Energy Strategy Reviews
• Print ISSN: 2211-467X
• Electronic ISSN: 2211-4688
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 2
• Issue: 1
• Pages: 108-115
• DOI: https://doi.org/10.1016/j.esr.2012.11.004
• Keywords: energy subsidies, Middle East, North Africa, energy pricing
• Publisher URL: http://www.sciencedirect.com/science/article/pii/S2211467X12000399
• Related Public URLs: http://www.sciencedirect.com/science/journal/2211467X/2/1
• Additional Information: Copyright Statement : Copyright © 2013 Elsevier Ltd. All rights reserved