Energy Subsidies in Latin America and the Caribbean: Stocktaking and Policy Challenges
80 Pages Posted: 7 Mar 2015
Date Written: February 1, 2015
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: Energy sector, Latin America, Caribbean, Fiscal policy, Subsidies, Public enterprises, Private investments, Energy Subsidies, Latin America and the Caribbean, electricity, prices, fuel, oil, tariff, generation, diesel, fuel prices, gasoline, oil prices, power, oil company, electricity price, energy prices, balance, oil firm, electricity utility, thermal energy, rural electrification, access to energy, oil producer, power systems, natural gas, petroleum products, volatile energy, fuels, electricity generation, natural gas resources, tax revenues, availability, energy policies, electricity tariffs, fuel products, tariff structure, oil producers, rural energy, oil exporters, vehicles, oil impor
JEL Classification: E60, H20, H50, H60
Suggested Citation: Suggested Citation