Fuel Price Subsidies in Gabon: Fiscal Cost and Distributional Impact

17 Pages Posted: 13 Nov 2006

See all articles by Daniel Leigh

Daniel Leigh

International Monetary Fund (IMF)

Moataz El Said

International Monetary Fund (IMF) - African Department

Date Written: October 2006

Abstract

This paper looks at the fiscal cost and distributional impact of implicit fuel price subsidies in Gabon, where fuel prices have remained largely unchanged since 2002. Using estimated implicit import parity prices, we evaluate the total fiscal cost of the subsidies at 3.2 percent of non-oil GDP in 2005 - more than total public health expenditures. We also analyze the distribution of the subsidies using household survey data and find that the bulk of the subsidies benefit higher-income households. Finally, we suggest use of a number of existing programs to provide a more targeted and cost-effective means of protecting the real incomes of lower-income households from the effects of energy price increases.

Keywords: Fuel-price subsidies, Gabon, income distribution

JEL Classification: H20, H22, H23

Suggested Citation

Leigh, Daniel and El Said, Moataz, Fuel Price Subsidies in Gabon: Fiscal Cost and Distributional Impact (October 2006). IMF Working Paper No. 06/243. Available at SSRN: https://ssrn.com/abstract=944081

Daniel Leigh (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Moataz El Said

International Monetary Fund (IMF) - African Department ( email )

1700 19th Street, NW
Washington, DC 20431
United States

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