Energy Subsidy Reform

Energy Subsidy Reform

This online course, presented by the IMF’s Institute for Capacity Development, Fiscal Affairs Department, and Middle East and Central Asia Department, builds on an extensive cross-country analysis and hands-on experience in technical assistance and subsidy reform design to make recommendations on how to best implement reforms aimed at reducing subsidies on energy. 

The course introduces the concept of energy subsidies—their definition and measurement—and reviews the economic, social, and environmental implications of subsidies. It also presents inhouse toolkits to assess the distributional effects of alternative subsidy reform scenarios on the population and to design a fuel pricing mechanism. Finally, the course reviews what works best in energy subsidy reform and illustrates successes and failures in particular country contexts. 

Course Objectives: Upon completion of this course, participants should be able to: 

• Explain the concept of energy subsidy and estimate pre-tax and post-tax subsidies. 

• Define corrective energy taxes and explain how to calculate them.

• Discuss the economic, social, and environmental impact of energy subsidies. 

• Explain how to design robust subsidy reform strategies. 

• Discuss policy responses to mitigate the effects of subsidy reform on inflation and on households’ welfare. 

• Use an Excel-based toolkit to assess the effects of alternative energy subsidy reform scenarios on households across different income groups. 

• Design appropriate fuel pricing mechanisms to mitigate fuel price volatility

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