Domestic Petroleum Product Prices and Subsidies: Recent Developments and Reform Strategies

26 Pages Posted: 12 Apr 2007

See all articles by David P. Coady

David P. Coady

International Monetary Fund (IMF)

Amine Mati

International Monetary Fund (IMF)

Taimur Baig

International Monetary Fund (IMF)

Joseph Ntamatungiro

International Monetary Fund (IMF)

Date Written: March 2007

Abstract

The paper reviews recent developments in the pass-through of international to domestic petroleum product prices, in the different fuel pricing regimes, and in fuel subsidies in a range of emerging market and developing economies. The main finding of the paper is the limited price pass-through in many countries and the consequent increase in fuel subsidies. The paper proposes that key elements of a successful strategy to contain subsidies should comprise: making subsidies explicit; making pricing mechanisms more robust; combining reductions in subsidies with measures to protect the poorest; using the resulting savings well, and transparency and consultation.

Keywords: fiscal policy, petroleum, subsidies

JEL Classification: E61, E62, E63

Suggested Citation

Coady, David P. and Mati, Amine and Baig, Taimur and Ntamatungiro, Joseph, Domestic Petroleum Product Prices and Subsidies: Recent Developments and Reform Strategies (March 2007). IMF Working Paper No. 07/71, Available at SSRN: https://ssrn.com/abstract=979025

David P. Coady (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Amine Mati

International Monetary Fund (IMF) ( email )

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

Taimur Baig

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States
(202) 623-8790 (Phone)
(202) 244-4505 (Fax)

Joseph Ntamatungiro

International Monetary Fund (IMF) ( email )

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

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