(Reuters) — Developing and industrialized countries should rein in energy subsidies that totaled $1.9 trillion in 2011 to ease budgetary pressures and free resources for public spending in areas like education and health care, International Monetary Fund economists said in a research paper published Wednesday.
In the paper, “Energy Subsidy Reform — Lessons and Implications,” the economists reviewed a database of 176 countries and analyzed ways to change energy subsidies by examining case studies of 22 countries.
In 2011, energy subsidies intended to contain energy prices for consumers accounted for 2.5 percent of global gross domestic product, or 8 percent of all government revenue, the fund said.
“The paper shows that for some countries the fiscal weight of energy subsidies is growing so large that budget deficits are becoming unmanageable and threaten the stability of the economy,” David Lipton, first deputy managing director of the fund, said in a speech on Wednesday.
The paper said that subsidies were expensive for governments, and that, instead of helping consumers, they detracted from increased investment in infrastructure, education and health care, which would help the poor more directly.
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