Governments in the GCC and wider Mena region are considering introducing more targeted subsidies to lower-income families as they seek to wean consumers off cheap fuel.
Jordan and Tunisia have moved ahead with trimming costly subsidies in the past year in a bid to ease fiscal pressures. In both nations the move sparked a wave of protests and strikes.
Against a tricky social backdrop, so called "smart subsidies", involving channelling assistance to poorer members of society, could prove an alternative to scrapping subsidies altogether, said Joe Saddi, the chairman of the consultancy Booz and Company, in an interview.
"Given the social and economic fabric and levels of income, I don't know if you can dispense with subsidies completely. But in the very least you can do a better job of targeting them to those that need help and not giving it to those that don't," he said.
Booz and Company was in talks with a couple of governments, both within the GCC and wider Mena region, about such an initiative, he said.
"The issue is whether there will be the will to go ahead with this," he said.
Governments in the Mena region spent close to US$240 billion on energy subsidies in 2011, about one half of the total global bill.
The need for reform has become more pressing in oil-importing nations as they seek to trim public spending to boost flagging growth in the wake of instability. In oil-exporting nations, cheap fuel has been blamed as one of the reasons for some of the world's highest rates of energy consumption.
"Subsidies distort price signals and fail to allow the market to allocate resources in the most efficient manner. This will act as a constraint on productivity growth, which ultimately determines the standard of living in the long run," according to the latest ICAEW Middle East economic insight report, released this week.
The IMF has made an easing of subsidies a cornerstone of its funding programmes with Jordan and Tunisia. Jordan last year raised the price of a range of fuels including bottled gas by more than 50 per cent and 33 per cent for diesel, while offering cash transfers to the poorest consumers in return. Tunisia in March raised most fuel prices for the second time in six months.
One of the fund's main criticisms of subsidies is that the bulk of their benefit goes to wealthier consumers, who tend to use more energy.
"The cost of energy is a huge drain on government spending, accounting for about 22 per cent of government revenue," said Masood Ahmed, the director of the IMF's Middle East and Central Asia department. In many regional countries public spending on energy subsidies is double or more the level of government investment in education.
Among oil-exporting countries, the UAE and Iran are among the few that have started to lift energy prices closer to market levels.
tarnold@thenational.ae
Cryopreservation: A timeline
- Keyhole surgery under general anaesthetic
- Ovarian tissue surgically removed
- Tissue processed in a high-tech facility
- Tissue re-implanted at a time of the patient’s choosing
- Full hormone production regained within 4-6 months
COMPANY PROFILE
● Company: Bidzi
● Started: 2024
● Founders: Akshay Dosaj and Asif Rashid
● Based: Dubai, UAE
● Industry: M&A
● Funding size: Bootstrapped
● No of employees: Nine
88 Video's most popular rentals
Avengers 3: Infinity War: an American superhero film released in 2018 and based on the Marvel Comics story.
Sholay: a 1975 Indian action-adventure film. It follows the adventures of two criminals hired by police to catch a vagabond. The film was panned on release but is now considered a classic.
Lucifer: is a 2019 Malayalam-language action film. It dives into the gritty world of Kerala’s politics and has become one of the highest-grossing Malayalam films of all time.
ICC Awards for 2021
MEN
Cricketer of the Year – Shaheen Afridi (Pakistan)
T20 Cricketer of the Year – Mohammad Rizwan (Pakistan)
ODI Cricketer of the Year – Babar Azam (Pakistan)
Test Cricketer of the Year – Joe Root (England)
WOMEN
Cricketer of the Year – Smriti Mandhana (India)
ODI Cricketer of the Year – Lizelle Lee (South Africa)
T20 Cricketer of the Year – Tammy Beaumont (England)
Brief scores:
Manchester City 3
Bernardo Silva 16', Sterling 57', Gundogan 79'
Bournemouth 1
Wilson 44'
Man of the match: Leroy Sane (Manchester City)
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How to protect yourself when air quality drops
Install an air filter in your home.
Close your windows and turn on the AC.
Shower or bath after being outside.
Wear a face mask.
Stay indoors when conditions are particularly poor.
If driving, turn your engine off when stationary.
PREMIER LEAGUE FIXTURES
Tuesday (UAE kick-off times)
Leicester City v Brighton (9pm)
Tottenham Hotspur v West Ham United (11.15pm)
Wednesday
Manchester United v Sheffield United (9pm)
Newcastle United v Aston Villa (9pm)
Norwich City v Everton (9pm)
Wolves v Bournemouth (9pm)
Liverpool v Crystal Palace (11.15pm)
Thursday
Burnley v Watford (9pm)
Southampton v Arsenal (9pm)
Chelsea v Manchester City (11.15pm)
The Sand Castle
Director: Matty Brown
Stars: Nadine Labaki, Ziad Bakri, Zain Al Rafeea, Riman Al Rafeea
Rating: 2.5/5
The specs
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TOURNAMENT INFO
Women’s World Twenty20 Qualifier
Jul 3- 14, in the Netherlands
The top two teams will qualify to play at the World T20 in the West Indies in November
UAE squad
Humaira Tasneem (captain), Chamani Seneviratne, Subha Srinivasan, Neha Sharma, Kavisha Kumari, Judit Cleetus, Chaya Mughal, Roopa Nagraj, Heena Hotchandani, Namita D’Souza, Ishani Senevirathne, Esha Oza, Nisha Ali, Udeni Kuruppuarachchi
Five personal finance podcasts from The National
To help you get started, tune into these Pocketful of Dirham episodes
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Balance is essential to happiness, health and wealth
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What is a portfolio stress test?
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What are NFTs and why are auction houses interested?
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How gamers are getting rich by earning cryptocurrencies
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Should you buy or rent a home in the UAE?
Zimbabwe v UAE, ODI series
All matches at the Harare Sports Club:
1st ODI, Wednesday, April 10
2nd ODI, Friday, April 12
3rd ODI, Sunday, April 14
4th ODI, Tuesday, April 16
UAE squad: Mohammed Naveed (captain), Rohan Mustafa, Ashfaq Ahmed, Shaiman Anwar, Mohammed Usman, CP Rizwan, Chirag Suri, Mohammed Boota, Ghulam Shabber, Sultan Ahmed, Imran Haider, Amir Hayat, Zahoor Khan, Qadeer Ahmed
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AT4 Ultimate, as tested
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WHAT IS A BLACK HOLE?
1. Black holes are objects whose gravity is so strong not even light can escape their pull
2. They can be created when massive stars collapse under their own weight
3. Large black holes can also be formed when smaller ones collide and merge
4. The biggest black holes lurk at the centre of many galaxies, including our own
5. Astronomers believe that when the universe was very young, black holes affected how galaxies formed
COMPANY PROFILE
Name: HyperSpace
Started: 2020
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
Based: Dubai, UAE
Sector: Entertainment
Number of staff: 210
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
Electric scooters: some rules to remember
- Riders must be 14-years-old or over
- Wear a protective helmet
- Park the electric scooter in designated parking lots (if any)
- Do not leave electric scooter in locations that obstruct traffic or pedestrians
- Solo riders only, no passengers allowed
- Do not drive outside designated lanes