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

C. Di Bella (), Lawrence Norton, Joseph Ntamatungiro, Sumiko Ogawa, Issouf Samaké and Marika Santoro

No 2015/030, IMF Working Papers from International Monetary Fund

Abstract: 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.

Keywords: WP; energy subsidy; country authorities; LAC country; stabilization fund; distribution company; Energy Subsidies; Fiscal Policy; Latin America and the Caribbean; authorities time; electricity subsidy; discretionary government intervention; hydro generator; low income; financing regime; State oil firm; oil-producer country; fuel subsidy; further government transfer; Fuel prices; Electricity; Tariffs; Oil prices; Caribbean; Central America; Global (search for similar items in EconPapers)
Pages: 79
Date: 2015-02-12
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (40)

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