IMF study: Governments subsidize energy $5.3T

IMF study: Governments subsidize energy $5.3T
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The world’s governments provide $5.3 trillion in subsidies for energy each year, according to a new study by the International Monetary Fund (IMF).

IMF economists came to the $5.3 trillion figure based on what they describe as a gap between what consumers and businesses are charged for energy and the external costs associated mostly with fossil fuels like pollution, traffic problems and climate change.


The subsidy amounts to about $10 million per minute, higher than what the world’s government spend on healthcare.

“These estimates are shocking,” the researchers said in a blog post about their work.

“They correspond to one of the largest negative externality ever estimated. They have global relevance.”

The researchers called for higher taxes on energy to better account for the true costs of it.

“The IMF has long argued that getting energy prices right can help national governments achieve their goals not only for the environment but also for inclusive growth and sound public finances,” they said. “Increasing energy prices gradually and predictably to reflect their true costs would generate fiscal gains of about 3.5 percent of GDP.”

The last time IMF’s economists undertook similar research in 2011, they estimated that energy subsidies were $2 trillion, less than half of the conclusions in the 2015 researcher.