Middle East offers world's largest fuel subsidies

25 March 2008
Middle East governments were more generous in subsidising oil products, including petrol, kerosene and diesel, than governments anywhere else in the world during 2007, according to the IMF.

While oil prices rose strongly through the year, governments in the Middle East passed on just 58 per cent of the increase in the cost of importing petrol.

At the same time, people in the region had to pay just 34 per cent of the increased cost of kerosene, which is used for cooking and heating.

Egyptians paid just $0.23 for a litre of kerosene at the end of 2006, compared with the $2.25 a litre paid by consumers in Turkey, which passed on more of the increase to consumers.

The region’s governments also passed on an average of 67 per cent of the increased cost of diesel to their consumers, a smaller amount than governments in any other part of the world.

Yemen spent 9.3 per cent of its gross domestic product on energy subsidies in 2006, the most of any country in the region.

The IMF report was based on a sample of 42 developing and emerging market economies.

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