Indonesia’s Fuel Subsidies Reforms
This paper provides an assessment of the fiscal and social impacts resulting from the fuel price adjustments undertaken in 2022. The note lays out policy options and their potential fiscal and social impacts to inform future reforms. The policy simulations examine two scenarios: (i) a one-time increase in fuel prices; and (ii) a gradual price increase to align with the market price‒accompanied, in each scenario, by social assistance to safeguard poor and vulnerable households. The analysis suggests that a one-time price adjustment would generate immediate and sizeable fiscal savings. However, it imposes a large shock on households and requires a higher fiscal cost to fully offset the impact on poverty. A gradual price increase would generate smaller fiscal savings and impose a smaller shock on households. Under each scenario, compensating the bottom 60 percent would fully alleviate the adverse effects on the poorest households and would cost about 20-34 percent of fiscal savings. In the medium to long term, supporting the poor and vulnerable through improved, more integrated, and dynamic social protection programs will be essential to sustain gains and minimize the risk of policy reversal.
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Format: | Report biblioteca |
Language: | English en_US |
Published: |
Washington, DC: World Bank
2024-05-29
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Subjects: | FUEL PRICE, ENERGY SUBSIDIES, FISCAL COSTS, SOCIAL IMPACTS, SDG 12, |
Online Access: | http://documents.worldbank.org/curated/en/099748505212431959/IDU1e31e5e531f16114baa1b62c1b3201c9c2e68 https://hdl.handle.net/10986/41617 |
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dig-okr-10986416172024-06-01T02:25:51Z Indonesia’s Fuel Subsidies Reforms Ihsan, Ahya Abriningrum, Dwi Endah Suharnoko, Bambang Suharnoko Rahmawati, Anissa Giannozzi, Sara FUEL PRICE ENERGY SUBSIDIES FISCAL COSTS SOCIAL IMPACTS SDG 12 This paper provides an assessment of the fiscal and social impacts resulting from the fuel price adjustments undertaken in 2022. The note lays out policy options and their potential fiscal and social impacts to inform future reforms. The policy simulations examine two scenarios: (i) a one-time increase in fuel prices; and (ii) a gradual price increase to align with the market price‒accompanied, in each scenario, by social assistance to safeguard poor and vulnerable households. The analysis suggests that a one-time price adjustment would generate immediate and sizeable fiscal savings. However, it imposes a large shock on households and requires a higher fiscal cost to fully offset the impact on poverty. A gradual price increase would generate smaller fiscal savings and impose a smaller shock on households. Under each scenario, compensating the bottom 60 percent would fully alleviate the adverse effects on the poorest households and would cost about 20-34 percent of fiscal savings. In the medium to long term, supporting the poor and vulnerable through improved, more integrated, and dynamic social protection programs will be essential to sustain gains and minimize the risk of policy reversal. 2024-05-29T19:35:44Z 2024-05-29T19:35:44Z 2024-05-29 Report http://documents.worldbank.org/curated/en/099748505212431959/IDU1e31e5e531f16114baa1b62c1b3201c9c2e68 https://hdl.handle.net/10986/41617 English en_US Equitable Growth, Finance and Institutions Insight - Macroeconomics, Trade and Investment CC BY 3.0 IGO https://creativecommons.org/licenses/by/3.0/igo/ World Bank application/pdf text/plain Washington, DC: World Bank |
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FUEL PRICE ENERGY SUBSIDIES FISCAL COSTS SOCIAL IMPACTS SDG 12 FUEL PRICE ENERGY SUBSIDIES FISCAL COSTS SOCIAL IMPACTS SDG 12 |
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FUEL PRICE ENERGY SUBSIDIES FISCAL COSTS SOCIAL IMPACTS SDG 12 FUEL PRICE ENERGY SUBSIDIES FISCAL COSTS SOCIAL IMPACTS SDG 12 Ihsan, Ahya Abriningrum, Dwi Endah Suharnoko, Bambang Suharnoko Rahmawati, Anissa Giannozzi, Sara Indonesia’s Fuel Subsidies Reforms |
description |
This paper provides an assessment of
the fiscal and social impacts resulting from the fuel price
adjustments undertaken in 2022. The note lays out policy
options and their potential fiscal and social impacts to
inform future reforms. The policy simulations examine two
scenarios: (i) a one-time increase in fuel prices; and (ii)
a gradual price increase to align with the market
price‒accompanied, in each scenario, by social assistance to
safeguard poor and vulnerable households. The analysis
suggests that a one-time price adjustment would generate
immediate and sizeable fiscal savings. However, it imposes a
large shock on households and requires a higher fiscal cost
to fully offset the impact on poverty. A gradual price
increase would generate smaller fiscal savings and impose a
smaller shock on households. Under each scenario,
compensating the bottom 60 percent would fully alleviate the
adverse effects on the poorest households and would cost
about 20-34 percent of fiscal savings. In the medium to long
term, supporting the poor and vulnerable through improved,
more integrated, and dynamic social protection programs will
be essential to sustain gains and minimize the risk of
policy reversal. |
format |
Report |
topic_facet |
FUEL PRICE ENERGY SUBSIDIES FISCAL COSTS SOCIAL IMPACTS SDG 12 |
author |
Ihsan, Ahya Abriningrum, Dwi Endah Suharnoko, Bambang Suharnoko Rahmawati, Anissa Giannozzi, Sara |
author_facet |
Ihsan, Ahya Abriningrum, Dwi Endah Suharnoko, Bambang Suharnoko Rahmawati, Anissa Giannozzi, Sara |
author_sort |
Ihsan, Ahya |
title |
Indonesia’s Fuel Subsidies Reforms |
title_short |
Indonesia’s Fuel Subsidies Reforms |
title_full |
Indonesia’s Fuel Subsidies Reforms |
title_fullStr |
Indonesia’s Fuel Subsidies Reforms |
title_full_unstemmed |
Indonesia’s Fuel Subsidies Reforms |
title_sort |
indonesia’s fuel subsidies reforms |
publisher |
Washington, DC: World Bank |
publishDate |
2024-05-29 |
url |
http://documents.worldbank.org/curated/en/099748505212431959/IDU1e31e5e531f16114baa1b62c1b3201c9c2e68 https://hdl.handle.net/10986/41617 |
work_keys_str_mv |
AT ihsanahya indonesiasfuelsubsidiesreforms AT abriningrumdwiendah indonesiasfuelsubsidiesreforms AT suharnokobambangsuharnoko indonesiasfuelsubsidiesreforms AT rahmawatianissa indonesiasfuelsubsidiesreforms AT giannozzisara indonesiasfuelsubsidiesreforms |
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1802820890416644096 |