Electricity tariff and VAT reform in Ethiopia: Welfare, poverty, and cost-of-living spillovers

Adnan Shahir and Jesse Lastunen

No wp-2026-38, WIDER Working Paper Series from World Institute for Development Economic Research (UNU-WIDER)

Abstract: Ethiopia initiated a major electricity sector reform in 2024, significantly increasing tariffs and introducing a value-added tax on electricity consumption to improve the financial sustainability of its state-owned utility. This study assesses the short-term distributional, sectoral, and cost-of-living impacts of this reform. The analysis links a tax-benefit microsimulation model (ETMOD) with a price-based social accounting matrix (SAM) multiplier framework to capture both direct, household-level welfare changes and indirect, economy-wide price transmission effects.

Keywords: Electricity; Pricing; Ethiopia; Microsimulation; Social Accounting Matrix; Household welfare; Poverty (search for similar items in EconPapers)
Date: 2026
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