The Socioeconomic Impacts of Energy Reform in Tunisia

Tunisian social development policy making has always counted on energy subsidies to play a pivotal role. Due to the increasingly unsustainable budget implications, a new strategy has begun to reform the subsidy system in the energy sector while striking a balance between improving fiscal and equity considerations without increasing social tensions. This paper presents an analysis of the fiscal and distributive consequences of the changes to the subsidy setup announced by the government at the end of 2014. The results show that raising electricity prices for consumers and removing subsidies for other energy sources would lead to a short-term increase in the poverty rate of 2.5 percentage points. In addition, compensation mechanisms that could be readily implemented (such as universal coverage or building on the existing health cards system) will not bring substantive counterweight to the increased poverty, even if all savings of reforms could be perfectly channeled as cash transfers. The analysis suggests that bold reforms of energy subsidies need to be accompanied by equally bold improvements to the targeting schemes of public spending if poverty and disparities are to be substantively reduced.

Bibliographic Details

Main Authors:	Cuesta, José, El-Lahga, Abdel Rahmen, Lara Ibarra, Gabriel
Format:	Working Paper biblioteca
Language:	English en_US
Published:	World Bank, Washington, DC 2015-06
Subjects:	LPG SUBSIDIES, GROWTH RATES, RAPID ECONOMIC GROWTH, PRICE DISTORTIONS, PRICE INCREASES, RESIDENTIAL CONSUMERS, PRICE OF ELECTRICITY, ELECTRICITY TARIFF, INCOME, MARGINAL COST, OIL COMPANY, ENERGY EXPENDITURE, EXCHANGE, ENERGY SOURCE, EXCLUSION, POLITICAL ECONOMY, GASOLINE, ENERGY PRODUCTS, WELFARE, TARIFF STRUCTURES, DISTRIBUTION, ENERGY SUBSIDIES, DOMESTIC PRICE, GAS, SUBSIDY, PRICE, TAX, VOLTAGE, INCOME TAX, WEALTH, INFORMATION SYSTEMS, SUBSIDY REDUCTION, ELECTRICITY CONSUMPTION, GASOLINE SUBSIDIES, TRENDS, SOCIOECONOMIC IMPACTS, DRIVERS, DISTRIBUTION OF ENERGY, OIL PRICES, PETROLEUM, SAVINGS, COSTS, OIL, TRANSPORT, ENERGY SOURCES, POPULATION GROWTH, RESIDENTIAL ENERGY, TAX EXEMPTIONS, EFFICIENT MARKET, FINANCIAL INSTITUTIONS, INCOME TAX DEDUCTIONS, TRUE, PUBLIC FINANCE, BUDGET DEFICITS, SOCIAL PROTECTION, PRICE SUBSIDIES, SOCIAL DEVELOPMENT, GROSS DOMESTIC PRODUCT, SULFUR, SUBSIDIES, MARKET PRICE, TAXES, SOCIAL PROTECTION STRATEGY, PUBLIC SUBSIDIES, EQUITY, ENERGY CONSUMPTION, CONSUMPTION, TRANSPORTATION, GOVERNMENT BUDGET, WAGES, POLICIES, TRANSPARENCY, BALANCE, SOURCE OF ENERGY, LPG SUBSIDY, FUTURE, MARKET PRICES, COMPETITIVENESS, POWER, ELECTRICITY, CEMENT, MARKET—PRICES, MARGINAL COSTS, INEFFICIENCY, HIDDEN SUBSIDIES, PRICE CHANGES, CONSUMERS, AGRICULTURE, PETROLEUM GAS, ELECTRICITY TARIFFS, ENERGY SUBSIDY, CONSUMER SUBSIDIES, SHARES, HOUSEHOLD BUDGETS, CONSUMPTION OF ENERGY, TRANSACTION COSTS, ENERGY PRICES, OUTPUT, GOVERNANCE, INSURANCE, ELECTRICITY PRICES, FOOD SUBSIDIES, NATURAL GAS, GDP, DOMESTIC PRICES, GOODS, EXTREME POVERTY, TARIFF STRUCTURE, SHARE, PUBLIC SUBSIDY, TARIFF, FUEL, CRUDE OIL, GINI COEFFICIENT, TAX DEDUCTIONS, INVESTMENTS, CONSUMER PRICE INDEX, DEDUCTIONS, HOUSEHOLD EXPENDITURES, COMMUNICATION, RAPID GROWTH, CONSUMPTION LEVELS, SOCIAL PROTECTION STRATEGIES, DIESEL, KEROSENE, OUTCOMES, CONSUMPTION INCREASES, PRICE OF GASOLINE, ADVERSE EFFECTS, APPROACH, PRICES, PRODUCTION COSTS, BENEFITS, ENERGY, DEVELOPMENT POLICY,
Online Access:	http://documents.worldbank.org/curated/en/2015/06/24649387/socioeconomic-impacts-energy-reform-tunisia-simulation-approach https://hdl.handle.net/10986/22186
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