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...

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Main Authors: Camos, Daniel, Estache, Antonio, Hamid, Mohamad M.
Format: Working Paper
Language:English
Published: World Bank, Washington, DC 2017
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
id okr-10986-29072
recordtype oai_dc
spelling okr-10986-290722021-06-08T14:42:47Z Quasi-Fiscal Deficits in the Electricity Sector of the Middle East and North Africa : Sources and Size Camos, Daniel Estache, Antonio Hamid, Mohamad M. FISCAL TRENDS DEFICIT SPENDING ELECTRICITY PUBLIC UTILITIES INVESTMENT ELECTRICITY DEMAND 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. 2017-12-21T19:57:58Z 2017-12-21T19:57:58Z 2017-12 Working Paper 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 English Policy Research Working Paper;No. 8280 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper Middle East and North Africa Middle East North Africa
repository_type Digital Repository
institution_category Foreign Institution
institution Digital Repositories
building World Bank Open Knowledge Repository
collection World Bank
language English
topic FISCAL TRENDS
DEFICIT SPENDING
ELECTRICITY
PUBLIC UTILITIES
INVESTMENT
ELECTRICITY DEMAND
spellingShingle FISCAL TRENDS
DEFICIT SPENDING
ELECTRICITY
PUBLIC UTILITIES
INVESTMENT
ELECTRICITY DEMAND
Camos, Daniel
Estache, Antonio
Hamid, Mohamad M.
Quasi-Fiscal Deficits in the Electricity Sector of the Middle East and North Africa : Sources and Size
geographic_facet Middle East and North Africa
Middle East
North Africa
relation Policy Research Working Paper;No. 8280
description 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.
format Working Paper
author Camos, Daniel
Estache, Antonio
Hamid, Mohamad M.
author_facet Camos, Daniel
Estache, Antonio
Hamid, Mohamad M.
author_sort Camos, Daniel
title Quasi-Fiscal Deficits in the Electricity Sector of the Middle East and North Africa : Sources and Size
title_short Quasi-Fiscal Deficits in the Electricity Sector of the Middle East and North Africa : Sources and Size
title_full Quasi-Fiscal Deficits in the Electricity Sector of the Middle East and North Africa : Sources and Size
title_fullStr Quasi-Fiscal Deficits in the Electricity Sector of the Middle East and North Africa : Sources and Size
title_full_unstemmed Quasi-Fiscal Deficits in the Electricity Sector of the Middle East and North Africa : Sources and Size
title_sort quasi-fiscal deficits in the electricity sector of the middle east and north africa : sources and size
publisher World Bank, Washington, DC
publishDate 2017
url 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
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