Oil Exporters Learn to Live with Cheaper Oil

Posted on June 8, 2016 by iMFdirect

By Martin Sommer, Juan Treviño, and Neil Hickey

Version in  عربي (Arabic)

The significant and prolonged drop in oil prices since mid-2014 has changed the fortunes of many energy-exporting nations around the world. This applies particularly to countries of the Middle East and Central Asia, because these regions are home to 11 of the world’s top 20 energy exporters.

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Filed under: Central Asia, growth, IMF, International Monetary Fund, Middle East, oil, trade | Tagged: , , , , , , , , , , , , , | Leave a comment »

Climate Change: How To Price Paris

Posted on January 11, 2016 by iMFdirect

by Vitor Gaspar, Michael Keen, and Ian Parry

(Versions in عربي, 中文, Español, and Français)

The Paris Agreement on Climate Change is a historic diplomatic achievement. Climate change is a global problem. Many believed that global problem solving would prove elusive: the benefits of cutting emissions arise globally while the costs of doing so are borne nationally, so national self-interest would prevent a meaningful agreement. Paris proves otherwise—creating a commonality of purpose at the global level.  Continue reading →

Filed under: Advanced Economies, climate change, Europe, Fiscal, Fiscal policy, IMF, International Monetary Fund | Tagged: , , , , , , , , | Leave a comment »

The Price of Oil and the Price of Carbon

Posted on December 2, 2015 by iMFdirect

By Rabah Arezki and Maurice Obstfeld

(Versions in عربي, 中文, Français, 日本語,  Русский, and Español)

“The human influence on the climate system is clear and is evident from the increasing greenhouse gas concentrations in the atmosphere, positive radiative forcing, observed warming, and understanding of the climate system.” —Intergovernmental Panel on Climate Change, Fifth Assessment Report

Fossil fuel prices are likely to stay “low for long.” Notwithstanding important recent progress in developing renewable fuel sources, low fossil fuel prices could discourage further innovation in and adoption of cleaner energy technologies. The result would be higher emissions of carbon dioxide and other greenhouse gases.

Policymakers should not allow low energy prices to derail the clean energy transition. Action to restore appropriate price incentives, notably through corrective carbon pricing, is urgently needed to lower the risk of irreversible and potentially devastating effects of climate change. That approach also offers fiscal benefits.

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Global Energy Subsidies Are Big—About US$5 Trillion Big

Posted on May 18, 2015 by iMFdirect

By Sanjeev Gupta and Michael Keen

(Versions in 中文, Français, 日本語, Русский and Español)

In their blog, Ben Clements and Vitor Gaspar make the points that global energy subsidies are still very substantial, that there is a strong need for reform in many countries, and that now is a great time to do it. This blog sets out what we mean by “energy subsidies,” provides details on their estimation, and explains how they continue to be high despite the recent drop in international energy prices (Chart 1).

Slide1

Our latest update of global energy subsidies shows that “pre-tax” subsidies—which occur when people and businesses pay less than it costs to supply the energy—are smaller than a few years back. But “post-tax” subsidies—which add to pre-tax subsidies an amount that reflects the environmental, health and other damage that energy use causes and the benefit from favorable VAT or sales tax treatment—remain extremely high, and indeed are now well above our previous estimates.

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Filed under: Finance, Globalization, IMF, International Monetary Fund, Reform | Tagged: , , , , , , , , , , | Leave a comment »

Oil Prices and Public Finances: A Double-Edged Sword

Posted on April 15, 2015 by iMFdirect

By Benedict Clements and Marta Ruiz-Arranz 

(Versions in 中文, Français, 日本語, Русский, عربي and Español)

Plunging oil prices have taken the public finances on an exciting ride the past six months. Oil prices have fallen about 45 percent since September (see April 2015 World Economic Outlook), putting a big dent in the revenues of oil exporters, while providing oil importers an unexpected windfall.  How has the decline in oil prices affected the public finances, and how should oil importers and exporters adjust to this new state of affairs?

In the April 2015 Fiscal Monitor, we argue that the oil price decline provides a golden opportunity to initiate serious energy subsidy and taxation reforms that would lock in savings, improve the public finances and boost long-term economic growth.

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Filed under: Annual Meetings, Economic Crisis, Economic outlook, Economic research, Emerging Markets, Finance, Financial Crisis, Fiscal policy, growth, IMF, International Monetary Fund, Middle East, Reform | Tagged: , , , , , , , , , , , , , , , , | Leave a comment »

Fiscal Impact of Lower Oil Prices on Latin America and the Caribbean

Posted on February 26, 2015 by iMFdirect

By Robert Rennhack and Fabián Valencia

(Versions in Español and Português)

The plunge in world oil prices—from $105 to about $50 per barrel since mid-2014—has been a boon for oil-importing countries, while presenting challenges for oil exporters.

In general, oil importers will enjoy faster growth, lower inflation, and stronger external positions, and most will not encounter any significant fiscal pressures. Oil exporters will tend to face slower growth and weaker external current account balances and some will run into fiscal pressures, since many rely on direct oil-related revenues. One country that stands out is Venezuela, which had been experiencing severe economic imbalances before oil prices began to fall and now finds itself in an even more precarious position.

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Filed under: Advanced Economies, Economic outlook, Economic research, Globalization, growth, IMF, International Monetary Fund, Investment, Latin America, Reform | Tagged: , , , , , , , , , , , , , , | Leave a comment »

Natural Gas: The New Gold

Posted on October 22, 2014 by iMFdirect

Rabah ArezkiBy Rabah Arezki

(version in Español)

Natural gas is creating a new reality for economies around the world.  Three major developments of the past few years have thrust natural gas into the spotlight: the shale gas revolution in the United States, the reduction in nuclear power supply following the Fukushima disaster in Japan, and geopolitical tensions between Russia and Ukraine.

What’s cooking

Over the last decade, the discovery of massive quantities of unconventional gas resources around the world has transformed global energy markets, and reshaped the geography of global energy trade (see map). Consumption of natural gas now accounts for nearly 25 percent of global primary energy consumption. Meanwhile, the share of oil has declined from 50 percent in 1970 to about 30 percent today.

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Filed under: Advanced Economies, Asia, Economic outlook, Economic research, Europe, Globalization, growth, IMF, International Monetary Fund, Investment, Politics | Tagged: , , , , , , , , , | Leave a comment »

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