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Working Paper

The Socioeconomic Impacts of Energy Reform in Tunisia : A Simulation Approach

LPG SUBSIDIES GROWTH RATES RAPID ECONOMIC GROWTH PRICE DISTORTIONS PRICE INCREASES RESIDENTIAL CONSUMERS PRICE OF ELECTRICITY ELECTRICITY TARIFF INCOME MARGINAL COST OIL COMPANY ENERGY EXPENDITURE EXCHANGE ENERGY SOURCE EXCLUSION POLITICAL ECONOMY GASOLINE ENERGY PRODUCTS WELFARE TARIFF STRUCTURES DISTRIBUTION ENERGY SUBSIDIES DOMESTIC PRICE GAS SUBSIDY PRICE TAX VOLTAGE INCOME TAX WEALTH INFORMATION SYSTEMS SUBSIDY REDUCTION ELECTRICITY CONSUMPTION GASOLINE SUBSIDIES TRENDS SOCIOECONOMIC IMPACTS DRIVERS DISTRIBUTION OF ENERGY OIL PRICES PETROLEUM SAVINGS COSTS OIL TRANSPORT ENERGY SOURCES POPULATION GROWTH RESIDENTIAL ENERGY TAX EXEMPTIONS EFFICIENT MARKET FINANCIAL INSTITUTIONS INCOME TAX DEDUCTIONS TRUE PUBLIC FINANCE BUDGET DEFICITS SOCIAL PROTECTION PRICE SUBSIDIES SOCIAL DEVELOPMENT GROSS DOMESTIC PRODUCT SULFUR SUBSIDIES MARKET PRICE TAXES SOCIAL PROTECTION STRATEGY PUBLIC SUBSIDIES EQUITY ENERGY CONSUMPTION CONSUMPTION TRANSPORTATION GOVERNMENT BUDGET WAGES POLICIES TRANSPARENCY BALANCE SOURCE OF ENERGY LPG SUBSIDY FUTURE MARKET PRICES COMPETITIVENESS POWER ELECTRICITY CEMENT MARKET—PRICES MARGINAL COSTS INEFFICIENCY HIDDEN SUBSIDIES PRICE CHANGES CONSUMERS AGRICULTURE PETROLEUM GAS ELECTRICITY TARIFFS ENERGY SUBSIDY CONSUMER SUBSIDIES SHARES HOUSEHOLD BUDGETS CONSUMPTION OF ENERGY TRANSACTION COSTS ENERGY PRICES OUTPUT GOVERNANCE INSURANCE ELECTRICITY PRICES FOOD SUBSIDIES NATURAL GAS GDP DOMESTIC PRICES GOODS EXTREME POVERTY TARIFF STRUCTURE SHARE PUBLIC SUBSIDY TARIFF FUEL CRUDE OIL GINI COEFFICIENT TAX DEDUCTIONS INVESTMENTS CONSUMER PRICE INDEX DEDUCTIONS HOUSEHOLD EXPENDITURES COMMUNICATION RAPID GROWTH CONSUMPTION LEVELS SOCIAL PROTECTION STRATEGIES DIESEL KEROSENE OUTCOMES CONSUMPTION INCREASES PRICE OF GASOLINE ADVERSE EFFECTS APPROACH PRICES PRODUCTION COSTS BENEFITS ENERGY DEVELOPMENT POLICY
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World Bank, Washington, DC
Middle East and North Africa | Tunisia
2015-07-16T21:49:16Z | 2015-07-16T21:49:16Z | 2015-06

Tunisian social development policy making has always counted on energy subsidies to play a pivotal role. Due to the increasingly unsustainable budget implications, a new strategy has begun to reform the subsidy system in the energy sector while striking a balance between improving fiscal and equity considerations without increasing social tensions. This paper presents an analysis of the fiscal and distributive consequences of the changes to the subsidy setup announced by the government at the end of 2014. The results show that raising electricity prices for consumers and removing subsidies for other energy sources would lead to a short-term increase in the poverty rate of 2.5 percentage points. In addition, compensation mechanisms that could be readily implemented (such as universal coverage or building on the existing health cards system) will not bring substantive counterweight to the increased poverty, even if all savings of reforms could be perfectly channeled as cash transfers. The analysis suggests that bold reforms of energy subsidies need to be accompanied by equally bold improvements to the targeting schemes of public spending if poverty and disparities are to be substantively reduced.

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