Quasi-Fiscal Deficits in the Electricity Sector of the Middle East and North Africa : Sources and Size
The annual electricity investments needed in the Middle East and North Africa region to keep up with demand have been estimated at about 3 percent of the region's projected gross domestic product. However, in most economies of the region, the...
| Main Authors: | , , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2017
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/836011513610464365/Quasi-fiscal-deficits-in-the-electricity-sector-of-the-Middle-East-and-North-Africa-sources-and-size http://hdl.handle.net/10986/29072 |
| Summary: | The annual electricity investments
needed in the Middle East and North Africa region to keep up
with demand have been estimated at about 3 percent of the
region's projected gross domestic product. However, in
most economies of the region, the ability to make those
investments is limited by fiscal and macroeconomic
constraints. This paper demonstrates that the solution is
readily available: by improving the management and
performance of the region's utilities, more than enough
resources could be freed up to make the investments needed.
The paper presents the first evaluation of the size and
composition of the quasi-fiscal deficit associated with the
management of the electricity sector in 14 economies in the
Middle East and North Africa region. The estimations are for
2013. They show that the average quasi-fiscal deficit is 4.4
percent of gross domestic product (but goes down to 2.9
percent if Lebanon, Djibouti, Bahrain, and Jordan are
excluded). Only five economies have a quasi-fiscal deficit
below 3 percent of gross domestic product (Algeria, Morocco,
Tunisia, Qatar, and the West Bank), and hence would not be
able to finance the average investment requirement through
elimination of inefficiencies. For most economies, the main
driver of the quasi-fiscal deficit is the underpricing of
electricity, which costs on average 3.2 percent of gross
domestic product (but 2.2 percent without Lebanon, Djibouti,
Bahrain, and Jordan). Commercial inefficiency comes next, at
an average cost of 0.6 percent of gross domestic product.
Technical and labor inefficiencies represent, respectively,
0.4 and 0.2 percent of gross domestic product. |
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