Fuel Subsidy Reform in Sudan : An Assessment of the Direct Welfare Impact on Households
This paper investigates the distributional direct welfare impact on households resulting from fuel subsidy removal. Note that this analysis focuses only on the direct distributional impact. A fuller understanding of the impact of fuel subsidies removal involves analyzing the indirect impact as well. Unfortunately, analysis of the distributional effect of fuel subsidies removal or fuel price increases is heavily constrained by the lack of appropriate data in Sudan. We do not have access to the relevant input-output table that describes the number of monetary transfers between sectors of the economy, making it impossible to simulate the indirect effect of fuel price increases on prices in other sectors. Therefore, the estimated impacts in this paper should be considered as the lower bound of the potential impact, as the overall impact will be higher when indirect impacts are factored. The paper is organized as follows. Section two examines the empirical evidence on the impact of fuel subsidy removal. Section three discusses the methodology and data used in this study. Section four presents an analysis of the welfare impact of fuel subsidies removal. Section 5, the conclusion, provides some suggestions on the way forward. The results from this work would inform policy dialogue with the Government of Sudan regarding the overall economic reforms that are being considered for stabilization of the economy.
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| Format: | Policy Note biblioteca |
| Language: | English |
| Published: |
World Bank, Washington, DC
2019-06
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| Subjects: | FUEL SUBSIDY, WELFARE IMPACT, POVERTY, |
| Online Access: | http://documents.worldbank.org/curated/en/124871628489531757/Fuel-Subsidy-Reform-in-Sudan-An-Assessment-of-the-Direct-Welfare-Impact-on-Households http://hdl.handle.net/10986/36100 |
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| Summary: | This paper investigates the
distributional direct welfare impact on households resulting
from fuel subsidy removal. Note that this analysis focuses
only on the direct distributional impact. A fuller
understanding of the impact of fuel subsidies removal
involves analyzing the indirect impact as well.
Unfortunately, analysis of the distributional effect of fuel
subsidies removal or fuel price increases is heavily
constrained by the lack of appropriate data in Sudan. We do
not have access to the relevant input-output table that
describes the number of monetary transfers between sectors
of the economy, making it impossible to simulate the
indirect effect of fuel price increases on prices in other
sectors. Therefore, the estimated impacts in this paper
should be considered as the lower bound of the potential
impact, as the overall impact will be higher when indirect
impacts are factored. The paper is organized as follows.
Section two examines the empirical evidence on the impact of
fuel subsidy removal. Section three discusses the
methodology and data used in this study. Section four
presents an analysis of the welfare impact of fuel subsidies
removal. Section 5, the conclusion, provides some
suggestions on the way forward. The results from this work
would inform policy dialogue with the Government of Sudan
regarding the overall economic reforms that are being
considered for stabilization of the economy. |
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