According to a report by the World Bank, fuel subsidies in countries like Egypt and Malaysia may be preventing governments from spending money on social programmes to help the poor.
Based on the report, fuel subsidies are the highest in the Middle East and North Africa. The subsidies here account for more than 4% of the gross domestic product (GDP), which is in contrast to the 1% of GDP spent on social safety net programmes like conditional cash transfers.
In the report, the World Bank says that energy subsidies “mostly have an impact on the upper-income groups in the population, who are more likely to be consuming electricity and fuels in larger quantities.” This might possibly result in governments not having enough funds for other kinds of public spending.
The World Bank’s report also found that less than a third of people living under extreme poverty are covered for by social transfer programmes.
Story and quote from: The Malay Mail Online
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