Yes very interesting.
I am sure that these many of these fuel subsidies are economically irrational and inefficient and the incidence is regressive.
But at the same time they can be politically rational- poor people are well aware that if they are taken away what they will get in return is unlikely to be as good. Hence riots in Nigeria for example. Partly precisely because what they get in return will not benefit the middle class so the middle class are not interested or supportive.
There are many who care about climate change that are siding with the IMF and others in favour of removing all fuel subsidies with little solid analysis of the political economy and poverty impact of their removal. I think we should be very careful about the poverty impact of such conclusions and at least be arguing for a clear scaling up of universal benefits before gradual subsidy removal begins. The opposite has happened in Ghana it would seem.
Cheers
Max Lawson
Director Policy and Campaigns, Oxfam
I am sure that these many of these fuel subsidies are economically irrational and inefficient and the incidence is regressive.
But at the same time they can be politically rational- poor people are well aware that if they are taken away what they will get in return is unlikely to be as good. Hence riots in Nigeria for example. Partly precisely because what they get in return will not benefit the middle class so the middle class are not interested or supportive.
There are many who care about climate change that are siding with the IMF and others in favour of removing all fuel subsidies with little solid analysis of the political economy and poverty impact of their removal. I think we should be very careful about the poverty impact of such conclusions and at least be arguing for a clear scaling up of universal benefits before gradual subsidy removal begins. The opposite has happened in Ghana it would seem.
Cheers
Max Lawson
Director Policy and Campaigns, Oxfam
