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The Distributional and Fiscal Implications of Public Utility Pricing
Author:
Mr. David Coady
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Samir Jahan https://isni.org/isni/0000000404811396 International Monetary Fund

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Fabiana Machado
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Mengfei Gu
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Series:
IMF Working Papers
Volume/Issue:
Volume 2023: Issue 118
Language:
English
Publication Date:
02 Jun 2023
DOI:
https://doi.org/10.5089/9798400243141.001
ISBN:
9798400243141
ISSN:
1018-5941
Pages:
39
Keywords:
Public utility pricing; efficiency; equity; fiscal sustainability; subsidy reform; utility pricing reform strategy; proxy-means test discount scheme; baseline tariff schedule; cost-recovery tariff; Tariffs; Consumption; Electricity; Household consumption; Income
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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The setting of public utility prices involves balancing various competing government policy objectives, from equity concerns to ensuring the financial sustainability of providers and balancing public finances. In practice, public utility pricing often departs significantly from government objectives and tends to be characterized by unnecessarily complex price schedules, below cost-recovery tariff rates, and sectoral inefficiencies that contribute to large fiscal costs. Countries commonly embark on utility pricing reform in response to these heavy fiscal pressures. The paper discusses various reform options available to governments, with a focus on residential pricing schedules, highlighting their fiscal, financial, redistributive, and efficiency implications.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund