Reforming Electricity Subsidies in Pakistan : Measures to Protect the Poor
As part of its energy sector reforms, the Government of Pakistan plans to reduce spending on electricity subsidies to 0.3-0.4 percent of gross domestic product (GDP) by mid-2016. The reforms will alleviate a major constraint on the government'...
| Main Authors: | , , , |
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| Format: | Economic & Sector Work |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2015
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2014/06/23853273/reforming-electricity-subsidies-pakistan-measures-protect-poor http://hdl.handle.net/10986/21569 |
| Summary: | As part of its energy sector reforms,
the Government of Pakistan plans to reduce spending on
electricity subsidies to 0.3-0.4 percent of gross domestic
product (GDP) by mid-2016. The reforms will alleviate a
major constraint on the government's budget. However,
they will necessitate increases in the price of electricity,
which have the potential to measurably reduce the welfare of
the poor. The government will need to carefully design the
price increases and provide associated compensation to avoid
this outcome. This paper demonstrates that that it is
possible for the government to protect the poor against most
of the costs of the reform while at the same time improving
the targeting of remaining subsidy expenditures. Measures
that can be taken include targeting subsidies based on
poverty scores and providing targeted cash compensation to
poor households. The authors illustrate how these measures
can be implemented, and estimate their associated welfare impacts. |
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