https://arab.news/g9644
RIYADH: Saudi Arabia spent the most per capita on energy subsidies — $6,996 — among the G20 economies last year, according to a report released by the International Monetary Fund.
The data showed that in 2022, the Kingdom spent 27 percent of its gross domestic product on subsidies for fossil fuels, amounting to $253 billion.
However, China recorded the highest spending among the G20 nations last year on implicit and explicit subsidies, totaling $2.2 trillion.
The Asian giant was followed by the US and Russia, which reported $757 billion and $421 billion in spending on implicit and explicit subsidies, respectively.
According to IMF data, fossil subsidies increased to a record high of $7 trillion in 2022.
“Fossil-fuel subsidies surged to a record $7 trillion last year as governments supported consumers and businesses during the global spike in energy prices caused by Russia’s invasion of Ukraine and the economic recovery from the pandemic,” stated the IMF in a blog published earlier this month.
Additionally, the IMF underlined the urgency of phasing out explicit and implicit subsidies as global energy prices are falling and emissions are rising for a healthier and more sustainable planet.
Fuel costs would rise if governments eliminated explicit subsidies and implemented corrective taxes, noted the IMF.
As a result, businesses and people would start to take environmental costs into account when choosing their next purchase or investment.
“The result would be cutting global carbon-dioxide emissions significantly, cleaner air, less lung and heart disease and more fiscal space for governments,” stated the blog.
Saudi Arabia’s reform on energy subsidies is “continuing unabated through planned step price increases that will lead to their elimination by 2030,” said the IMF in a report released in August 2022.
However, Saudi Arabia opposes lifting the gasoline price cap, citing the significance of maintaining social cohesion and making sure that costs for industries remain manageable as the Kingdom tries to boost private sector development.
Even though targeted social safety net programs are being developed and mechanisms are being put in place to limit leakages already implemented, scaling them up is too early, added the IMF.