Reforming Fuel Subsidies

This course, presented by the IMF’s Fiscal Affairs Department, explores recent developments in subsidy expenditures for fuel products, their macroeconomic impact, and the environmental and social implications. Building on country-specific case studies, the course elaborates on key elements of successful reforms, including targeted mitigating measures to protect low-income groups adversely affected by the reduction of subsidies. The course also disseminates tools for measuring subsidies, and assessing the distributional impact and alternative fuel pricing mechanisms that can help smooth the transmission of international fuel prices to domestic prices while protecting the budget. Participants may be asked to make presentations on different aspects of their country’s experience in setting fuel prices and reforming subsidies. 

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

• Explain the different concepts of energy subsidies and their measurement. 

• Describe the drawbacks of energy subsidies. 

• Identify potential barriers to fuel subsidy reform. 

• Design an appropriate reform strategy drawing on lessons from other country experiences. 

• Use tailored tools to measure fuel subsidies, estimate the impact of a fuel subsidy reform on household welfare in order to inform the design of mitigating measures, and guide the choice of alternative fuel pricing mechanisms.