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Energy subsidies in the Middle East and North Africa

Fattouh, Bassam and El-Katiri, Laura (2013) 'Energy subsidies in the Middle East and North Africa.' Energy Strategy Reviews, 2 (1). pp. 108-115.

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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.

Item Type: Articles
Keywords: energy subsidies, Middle East, North Africa, energy pricing
SOAS Departments & Centres: Faculty of Law and Social Sciences > School of Finance and Management > Centre for Financial and Management Studies (CeFiMS)
Faculty of Law and Social Sciences > Department of Politics and International Studies > Centre on the Politics of Energy Security (CEPES)
ISSN: 2211-467X
Copyright Statement: Copyright © 2013 Elsevier Ltd. All rights reserved
DOI (Digital Object Identifier): 10.1016/j.esr.2012.11.004
Depositing User: Laura El-Katiri
Date Deposited: 21 Jun 2013 08:58
URI: http://eprints.soas.ac.uk/id/eprint/16675

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