The Socioeconomic Impacts of Energy Reform in Tunisia : A Simulation Approach
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 str...
| Main Authors: | , , |
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2015
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2015/06/24649387/socioeconomic-impacts-energy-reform-tunisia-simulation-approach http://hdl.handle.net/10986/22186 |
| Summary: | 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. |
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