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Subsidies

While information on public employment is patchy, more research has been carried out on subsidies in the Arab world, particularly on energy subsidies. With energy subsidies that are on average 12 times higher than in the world at large according to 2011 imf estimates, the region stands out even more—and this includes energy importers, where subsidies have a direct fiscal impact rather than the harder to define opportunity costs of energy subsidies for energy

Government subsidies and transfers in international comparison

figure 5.3 Government subsidies and transfers in international comparison

source: author, calculated from world bank development indicators data.

exporters (Luciani, 2012). Among the core Arab countries, Morocco alone has managed to reduce energy subsidies to a fiscally manageable level (Figure 5.4). Although the 2011 figures are inflated by the high international energy prices of that year, Arab countries continue to devote much more resources to the provision of cheap energy than do most other developing countries.

The subsidies consist of cheap transport fuel, electricity and gas. Average diesel prices in mena are lower than in any other region of the world and only half of us prices. Electricity subsidies average 2 per cent of gdp (Sdralevich et al., 2014).

Most mena governments also continue to provide food subsidies that represent an average of almost 1 per cent of gdp and are considerably higher in formerly ‘progressive’ republics like Tunisia, Algeria, Egypt, Syria and Iraq.

 
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