Wednesday, May 29, 2024
English English French Spanish Italian Korean Japanese Russian Hindi Chinese (Simplified)

Image source: Bloomberg

Saudi Arabia’s total spending on fuel subsidies soared over the past two years, hitting the highest among the Group of 20 economies on a per capita basis. The country spent almost $7,000 per person, equivalent to about 27% of economic output, across both explicit and implicit energy subsidies, according to a paper published by the International Monetary Fund.

Fossil fuel subsidies soared globally since 2020 to $7 trillion last year as governments took measures to protect consumers and businesses from a spike in prices following Russia’s invasion of Ukraine, according to the IMF paper. It estimated that cutting fossil fuel subsidies could help reduce carbon dioxide emissions, and deaths from air pollution and boost government revenues.


“Fossil fuels in most countries are priced incorrectly,” Simon Black, Antung A. Liu, Ian Parry, and Nate Vernon wrote in the IMF working paper. “Unfortunately, current prices are routinely set at levels that do not adequately reflect environmental damages and, in some cases, not even supply costs.”

China – which spent $2.2 trillion – was the biggest provider of subsidies in absolute terms, followed by the US and Russia, according to the IMF. Saudi Arabia spent a total of $253 billion on subsidies last year.

The IMF has been urging Saudi Arabia to push ahead with measures to cut the government subsidy bill and take steps to protect the welfare of low-income households through increased and targeted social spending. The spending has made Saudi gasoline one of the cheapest in the world.

In 2021, the government set a cap for the domestic cost of gasoline to soften the impact of higher living costs on citizens, just months before prices soared to over $100 a barrel.

In its Article IV Consultation last year, the IMF said that the kingdom’s work on subsidy reforms is “continuing unabated through planned step price increases that will lead to their elimination by 2030.”

Implicit subsidies, which the IMF defined as undercharging for the environmental cost of fossil fuel burning and lost tax revenue, made up the bulk of the global total. Explicit subsidies, or selling fuels at below supply costs, had a share of just 18%.


* indicates required

The Enterprise is an online business news portal that offers extensive reportage of corporate, economic, financial, market, and technology news from around the world. Visit to explore daily national, international & business news, track market movements, and read succinct coverage of significant events. The Enterprise is also your reach vehicle to connect with, and read about senior business executives.

Address: 150th Ct NE, Redmond, WA 98052-4166

©2024 The Enterprise – All Right Reserved.

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept