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Business and Economics > Public Finance

You are looking at 1 - 10 of 31 items for :

  • Type: Journal Issue x
  • Energy: Government Policy x
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Cover IMF Working Papers
The Political Economy of Fossil Fuel Subsidy Removal: Evidence from Bolivia and Mexico
Mariza Montes de Oca Leon
,
Achim Hagen
, and
Franziska Holz
We study the impact of fossil fuel subsidy removal on presidential popularity using difference-indifference approaches and a stylized theoretical model. Analyzing macro level data for two subsidy removal events in Mexico and Bolivia in the early 2010s, we find evidence of a negative impact on presidential approval. Our theoretical probabilistic voting model predicts that the decline in popularity is driven by high income groups if subsidies are regressive, and that lack of trust in the government lowers popularity of the removal in all income groups. We confirm these predictions using micro level data for the Mexican subsidy removal event.
Keywords:
Political economy; Fossil fuels; Subsidy removal; removal event; on approval rating; outcome variable; outcome predictor; Energy subsidies; Income; Fuel prices; Non-renewable resources; Gasoline; Caribbean
Cover High-Level Summary Technical Assistance Reports
High-Level Summary Technical Assistance Report: Mauritania: Tax Policy Diagnostic
Grégoire Rota-Graziosi
,
Thomas Benninger
,
Jean-François Brun
,
Emilie Caldeira
, and
Fayçal Sawadogo
The IMF’s Fiscal Affairs Department has been working with Mauritania on capacity building in tax policy. Mauritania has recently created a tax policy unit and adopted a new General Tax Code in 2019 with a corporate income tax and a semi-dual approach to personal income taxation. However, there is significant scope to enhance the efficiency and effectiveness of income taxes, including due to the proliferation of wasteful tax exemptions. The fast urbanization also calls for a review of recurrent property taxation. The formalization of property rights requires a temporary suspension of the excessive registration fees. Consumption taxation can also be improved by broadening the tax base, for example, by abolishing regressive value-added tax exemptions or by imposing excise taxes on imported used vehicles. Finally, several recommendations aim to support the reform of the Mining Code, such as introducing some progressivity, prohibiting the negotiation of any tax parameters, and strengthening the principle of ring-fencing.
Keywords:
direct taxation; indirect taxation; CIT; VAT; property tax; mining taxation; tax credits; tax policy diagnostic; consumption taxation; IMF's Fiscal Affairs Department; regressive value-added tax exemption; mining tax regime; Income and capital gains taxes; Corporate income tax; Global
Cover IMF Staff Country Reports
France: 2024 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for France
International Monetary Fund. European Dept.
The 2024 Article IV Consultation with France discusses that strong and timely policy response helped cushion the impact of the coronavirus disease 2019 pandemic and the energy crisis resulting from Russia’s war in Ukraine. Despite a recovery slowdown in 2023, the French economy has remained relatively resilient in the face of financial tightening and weaker euro area external demand. Nevertheless, the crisis response and slower-than-expected recovery have weighed on public finances, with a sizable fiscal underperformance in 2023 reducing fiscal space at a time of rising investment needs for the green and digital transformation. While financial conditions started improving in early 2024, market pressures on sovereign spreads and stock markets rose in early June following the European elections amid political uncertainty. Growth is projected to gradually reach 1.3 percent by 2025 from 0.9 percent in 2024. The disinflationary process is on track, with headline inflation expected to reach 2.3 percent in 2024 and return to target in the first half of 2025. The outlook remains subject to high uncertainty. Heightened political fragmentation and policy uncertainty domestically could delay fiscal consolidation and reform efforts, weighing on confidence and public finances. The French authorities should continue to advance structural reforms to support jobs and raise productivity, amid ongoing geopolitical and economic transitions.
Keywords:
government projection; single market; policy uncertainty; labor market performance; unemployment benefit reform; resilience to shock; solvency requirement; liquidity managements tool; stability program; headline inflation; climate transition risk; Labor markets; Climate change; Global; Europe
Cover Selected Issues Papers
Mitigating Fiscal Risks in Oman
Abdullah Alhassan
and
Dalia Aita
Fiscal risks are multifaceted in Oman and their potential impact on the fiscal position could be significant. Identification, monitoring, transparent reporting, and effective risk management of fiscal risks are a key component of a sound medium-term fiscal framework and paramount in underpinning fiscal credibility and the sustainability of public finances. This note revisits the exposure of Oman’s fiscal position to an array of potential risks, zooming in on the impact of oil price volatility and potential risks stemming from state-owned enterprises. It documents actions taken by Omani policymakers to mitigate the impact of fiscal risks and provides further recommendations on fiscal risk disclosure and management.
Keywords:
Oman; Fiscal Risks; Oil Price; Transparency; oil price volatility; copyright page; impact of fiscal risk; SOEs performance; SOEs debt; budget preparation process; downside oil price scenario; SOEs governance; Oil prices; Public enterprises; Global
Cover IMF Staff Country Reports
Austria: Selected Issues
International Monetary Fund. European Dept.
This Selected Issues paper analyzes drivers of core inflation in Austria. Inflation in Austria has declined on falling energy prices, but the pace of its return to the two percent target is uncertain. In order to gain insight into the likely pace of disinflation, this chapter examines key drivers of core inflation from two perspectives. First, it explores how energy prices have affected core inflation by examining differences in inflation trends between core goods and services with a relatively high energy-input content versus those with a relatively low energy-input content. Second, the paper uses a parsimonious econometric model to generate forecasts of core inflation. The paper concludes that there are good reasons to expect core inflation to keep falling as lower energy prices continue to pass through to core prices and as euro-area inflation, a key determinant of Austrian inflation in the econometric model, continues to fall. However, the IMF staff does not project Austrian inflation to reach the two percent target for some time, given inflation’s current elevated level and somewhat sticky services inflation.
Keywords:
housing price indicator; core inflation development; housing supply gap; A. looming expenditure pressure; model-implied core inflation; Inflation; Housing; Renewable energy; Women; Europe; Global
Cover IMF Working Papers
Energy Support for Firms in Europe: Best Practice Considerations and Recent Experience
Mr. Anil Ari
,
Philipp Engler
,
Gloria Li
,
Manasa Patnam
, and
Ms. Laura Valderrama
The surge in energy prices due to Russia’s February 2022 invasion of Ukraine significantly increased costs for European firms, prompting governments to introduce a range of support schemes. Although energy prices had eased by early 2023, uncertainty around prices remains unusually large. Against this backdrop, this paper examines the case for government intervention and identifies best practices with a view to improving the design of existing energy support schemes, facilitating exit from those schemes, and preparing policymakers for a downside scenario in which energy prices flare up again. The paper argues that support should be limited in size, strictly temporary in nature, narrowly targeted, and accompanied by strong safeguards and conditionality, while preserving price signals as much as possible to encourage energy conservation. Finally, the paper reviews recent support schemes introduced by European governments in light of the identified best practice considerations.
Keywords:
Energy prices; energy subsidies; financial support; price caps; energy crisis; Russia’s invasion of Ukraine; energy support scheme; price signal; best practice consideration; Annex II; support scheme; Energy pricing; Energy conservation; Fuel prices; Solvency; Europe
Cover IMF Working Papers
IMF Fossil Fuel Subsidies Data: 2023 Update
Mr. Simon Black
,
Antung A. Liu
,
Ian W.H. Parry
, and
Nate Vernon
This paper provides a comprehensive global, regional, and country-level update of: (i) efficient fossil fuel prices to reflect supply and environmental costs; and (ii) subsidies implied by charging below efficient fuel prices. Globally, fossil fuel subsidies were $7 trillion in 2022 or 7.1 percent of GDP. Explicit subsidies (undercharging for supply costs) have more than doubled since 2020 but are still only 18 percent of the total subsidy, while nearly 60 percent is due to undercharging for global warming and local air pollution. Differences between efficient prices and retail fuel prices are large and pervasive, for example, 80 percent of global coal consumption was priced at below half of its efficient level in 2022. Full fossil fuel price reform would reduce global carbon dioxide emissions to an estimated 43 percent below baseline levels in 2030 (in line with keeping global warming to 1.5-2oC), while raising revenues worth 3.6 percent of global GDP and preventing 1.6 million local air pollution deaths per year. Accompanying spreadsheets provide detailed results for 170 countries.
Keywords:
Fossil fuel subsidies; efficient fuel prices; supply costs; climate change; local air pollution mortality; revenue gains; energy price surge; non-pricing reform; spreadsheet tools; IMF fossil fuel subsidies datum; price reform; air emission fee; supply cost; Fuel prices; Non-renewable resources; Energy subsidies; Greenhouse gas emissions; Global; North America; East Asia; Caribbean; South Asia
Cover IMF Staff Country Reports
Euro Area Policies: 2023 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Euro Area; IMF Country Report No. 23/264
International Monetary Fund. European Dept.
The 2023 Article IV Consultation discusses that the euro area economy has shown remarkable resilience in the aftermath of Russia’s invasion of Ukraine and the largest terms of trade shock in several decades, thanks to a swift policy response and a strong rebound in contact-intensive services. Looking ahead, growth is expected to pick up gradually throughout 2023 and 2024, supported by a recovery in real incomes in the context of continued tight labor market conditions, a further easing of supply constraints, and firmer external demand, even as financial conditions continue to tighten. While headline inflation has fallen sharply recently after reaching record high levels, core inflation is proving more persistent. As tight financial conditions restrain demand and supply shocks dissipate further, inflation is set to decline further but is expected to remain elevated for an extended period. Renewed supply shocks, which could result from an escalation of the war in Ukraine and a related increase of commodity prices, or a further intensification of geoeconomic fragmentation, would also push up inflation and hurt growth. On the upside, the economy could again prove more resilient than expected, especially amid a still large stock of excess savings.
Keywords:
Euro area headline inflation; inflation expectation; EU climate investment fund; EU AML authority; EU institution; EU bank; core inflation; EU economy; Inflation; Energy prices; Fiscal stance; Monetary tightening; Global; Europe
Cover IMF Staff Country Reports
Germany: 2023 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Germany
International Monetary Fund. European Dept.
This 2023 Article IV Consultation discusses that the German economy has demonstrated resilience following the shut-off of Russian gas supply in the year 2022. The energy shock and tightening financial conditions are expected to keep annual gross domestic product (GDP) growth slightly negative in 2023. Uncertainty is unusually high, with substantial risks in both directions, which on balance are tilted downward for growth. Near-term policy priorities include supporting disinflation by tightening fiscal policy. The planned tightening of the cyclically-adjusted primary balance by around ½ percent of GDP in 2023 will support these efforts. An additional 1 1/2 percent of GDP in 2024 is appropriate under the baseline forecast and can be achieved mainly by saving expected underspending on energy price relief and any revenue over performance. The authorities’ policy response to spillovers from Russia’s war in Ukraine has been timely and generally well designed. Continued efforts will be needed to address ongoing challenges related to inflation risks, rising interest rates, population aging, the green transition, and increasing risks associated with global geoeconomic fragmentation (GEF).
Keywords:
price expectation; financial asset; liquidity stress; government plan; heating price brake; upstream price pressure; currency of Germany; gas price brake; article IV consultation discussion; Inflation; Commercial banks; Energy prices; Cooperative banks; Energy pricing; Global; Europe
Cover IMF Staff Country Reports
United Arab Emirates: 2022 Article IV Consultation-Press Release; and Staff Report
International Monetary Fund. Middle East and Central Asia Dept.
The 2022 Article IV Consultation highlights that United Arab Emirates (UAE) economic growth strengthened in 2022, benefitting from a rapid and effective coronavirus disease response, supportive fiscal measures, and the benefits of earlier social and business-friendly reforms. The economic outlook remains positive, supported by strong domestic activity. Overall, gross domestic product is projected to grow at 3.6 percent in 2023, with non-hydrocarbon growth of 3.8 percent driven by continued tourism activity and increased capital expenditure. Strong reform efforts continue under the UAE 2050 strategies. Advancement on Comprehensive Economic Partnership Agreements will boost trade and integration in global value chains and further attract Foreign Direct Investment. In addition, the benefits of artificial intelligence and digitalization and investments in enabling infrastructure will further support economic diversification, foster a smooth energy transition, and help address vulnerabilities from global decarbonization efforts. Long-term vulnerabilities from global decarbonization efforts are being addressed through commitments to climate initiatives and a balanced approach to energy transition.
Keywords:
reform effort; manufacturing sector producer price index; transparency policy; UAE's productivity; liability positions vis-à-vis nonresident; inflation dynamics in the UAE; Climate finance; Oil prices; Climate change; Global