Front Matter

Front Matter

Juan Cordoba, Robert Gillingham, Sanjeev Gupta, Ali Mansoor, Christian Schiller, and Marijn Verhoeven
Published Date:
December 2000
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© 2000 International Monetary Fund

Production: IMF Graphics Section

Cover design: Sanaa Elaroussi

Typesetting: Alicia Etchebarne-Bourdin

Library of Congress Cataloging-in-Publication Data

Equity and efficiency in the reform of price subsidies: a guide for policymakers/Sanjeev Gupta … [et al.].

p. cm.

Includes bibliographical references and index.

ISBN 1-55775-973-1

1. Subsidies. 2. Policy sciences. I. Gupta, Sanjeev. II. International Monetary Fund.

HC79.S9 E68 2000

338.9’22—dc21 00-050588

Price: $15.00

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The reform of price subsidies may be necessary not only to improve efficiency, but also to facilitate pro-poor economic growth and release resources for critical social services for the poor. At the same time, increases in prices for basic commodities and petroleum products can be associated with real income losses for the poor as well as political unrest in some cases. This guide provides guidance to policymakers on how to design and implement sound price-subsidy reforms that take into account both economic and social considerations.

This guide draws on the experience with the reform of price subsidies in 28 countries. It discusses economic and political considerations in price-subsidy reform and makes several recommendations concerning the speed of reform and social protection mechanisms. Rapid reform requires a favorable political and economic environment. In the absence of this, reform should be implemented gradually. The social impact of reform can be limited by establishing cost-effective and well-targeted temporary social protection mechanisms. Governments can reduce the risk of political disruption by distributing the initial burden of reform fairly and by clearly explaining the cost and benefits to the public.

The authors would like to thank Stanley Fischer, Vito Tanzi, Peter Heller, and Ke-young Chu as well as staff of various IMF departments for helpful comments on earlier versions. Administrative support was ably provided by Cecilia Pineda, Larry Hartwig, and Amy Deigh. David Driscoll of the IMF’s External Relations Department edited the manuscript and Gail Berre coordinated production of the publication.

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