How have oil prices impacted Arab countries' energy subsidy reforms?

Volatility in international oil prices have, in part, encouraged Arab countries to undertake various reform actions and make progress in reducing their energy subsidies. The region witnessed an unprecedented wave of energy subsidy reforms with 6 countries carrying out reforms in 2014 and 13 countries in 2020.

Where do energy subsidies come from?

Energy subsidies are commonplace across developed and developing countries. Post-tax subsidies accounted for around $5.3 trillion, or 6.5%, of global GDP in 2015, while they can reach about 13%–18% of GDP in developing countries in Asia, the Middle East and Northern Africa (MENA) region, or the Commonwealth .

Which region has the most energy subsidies?

The MENA region holds the highest share of global pre-tax energy subsidies, at around $237 trillion (48%) of global subsidies in 2011, accounting for around 9% of the region’s GDP . At the same time, energy resources are abundant, except in some countries such as the net oil-importing countries (Morocco, Tunisia, Egypt, Jordan, and Lebanon).

Do energy subsidies affect government expenditures in GCC countries?

Energy subsidies can account for a large share of government expenditures in some GCC countries. In light of fiscal imbalances since 2014, these countries have reiterated their intention to decrease subsidies and substitute them with more targeted support systems. This paper briefly outlines the extent of energy subsidies.

How much energy will Arab countries have by 2020?

The installed capacity by 2020 is 12.4 GW, compared to the 7.2 GW in 2018. Around 5 GW were added in 2 years. PV capacity increased from 3.2GW by the end of 2018 to 7.4GW by the end of 2020. As for energy efficiency, the energy intensity of growth has increased since 1990 in most Arab countries and is above the European average.

What are the adverse effects of energy subsidies?

El-Katiri and Fattouh explained some of the adverse impacts of energy subsidies such as revenues losses, underinvestment in energy infrastructure, the relatively higher share of subsidies to the non-poor households, energy smuggling due to price differences among countries, or distortions in local energy markets.