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As energy prices tumble, developing countries trim subsidies
(New York Times, 11 Jun 2020) Trying to cut spending as the pandemic reduces tax revenue, governments are finding it easier to lift restraints on what consumers pay for fuel.
The coronavirus pandemic has sent economies into recession and reduced government revenue, so some countries are taking a politically perilous path: removing restraints on electricity and petroleum prices.
Nigeria and Tunisia have lowered fuel subsidies in recent weeks, and India has raised taxes on gasoline and diesel fuel. Sudanese officials plan to replace some subsidies with direct cash payments to the poor. Venezuela, where the economy was collapsing before the pandemic, has partly reversed decades of gasoline subsidies. And the state-owned electric utility in Dubai is seeking to raise rates for the first time in a generation.
In contrast to the recent past, elected leaders are facing little political blowback for taking away subsidies and raising taxes. That’s because the prices of oil, natural gas and other fuels have collapsed in recent months. In addition, driving, flying and industrial activity have dropped off sharply.
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New York Times, 11 Jun 2020: As energy prices tumble, developing countries trim subsidies
