1 min read • viewpoint

Reforming the energy subsidy systems in the Middle East

Who could lead the region?


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Lukas Vylupek

Czech RepublicPartner


Positive demography and economic growth, driven by energy-intensive production, are driving up overall energy consumption even more. Without reforming or abandoning energy price subsidies, governments are very likely to see further increase in their already-high subsidy costs, further compromising more other economically efficient public spending priorities. It is evident that the pressure is on and governments must simply reform their energy price subsidies. However, they face a number of real challenges when revising their energy pricing systems, as energy pricing reform has potential to induce two major effects: decline in households’ welfare, and erosion of regional industries’ global competitiveness. So what, then, are the key considerations and success factors governments should consider and reflect in their efforts to reform their respective subsidy systems, but at the same time ensure that potential negative politico-economic and social implications are efficiently mitigated? Does the region need a leader whose reform outcomes would set examples of successful reform policies that are sharable across the region and create reform momentum?

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