IMF Signals Push to Scrap Energy Subsidies

The globe could solve many fiscal woes by ending nearly $2 trillion in fuel subsidies, the International Monetary Fund claims. “The fund’s call suggests higher fuel prices could become a central condition of IMF help in the future, with subsidies proving a sticking point in its talks with countries such as Egypt, Pakistan and Ukraine,” reports Robin Harding for the Financial Times. The IMF lists the top three subsidizers in absolute terms: the US, China and Russia. Subsidies of fossil fuels promote waste, reduces production for developing nations, and blocks innovation; they also benefit the rich more than the poor who use less fuel. Reducing subsidies would reduce fuel consumption and carbon emissions. Fuel prices often do not reflect the true costs, including health problems and environmental damage, so carbon taxes could someday be imposed as a condition, too. But for now, the IMF hopes that ending subsidies would erase budget deficits. – YaleGlobal