World Bank Warns GCC to cut $160 Billion Annual Energy Subsidies

By Bizclik Editor

The World Bank has expressed its concern at the volume of energy subsidies found in the Middle East and North Africa (MENA) region.

More specifically, the financial body is worried by the $160 billion spent each year by the Arab states in the Gulf, with Shantayanan Devarajan, World Bank chief economist for Middle East and North Africa, telling a news conference that "Gulf states spend around 10 percent of their gross domestic product every year on energy subsidies including fuel and electricity. That amounts to $160 billion."

The combined GDP of the GCC (Saudi Arabia, Qatar, UAE, Bahrain, Kuwait and Oman) stands at around $1.64 trillion, with Saudi Arabia accounting for nearly half of its energy subsidies.  

Arab countries in the Gulf pump 20 percent of the world’s crude oil. Devarajan said: "The GCC and other MENA states must start cutting energy subsidies now otherwise problems associated with them will get worse.”

The MENA region combines to account for 48 percent of global energy subsidies despite being home to little more than a twentieth of the globe’s people. This translates to around $250 billion. Countries like Iraq and Iran, big exporters of oil, spend more than 10 percent of their GDP on subsidies.

The report said that such high spending on energy subsidies is preventing money being spent on health, education and other investments, and could even threaten the sustainability of public debt. To make clear this point, the World Bank claims that Egypt spends 700 percent more on fuel subsidies than it does on health.

"The MENA region suffers from low growth, high unemployment, traffic congestion and pollution... energy subsidies contribute to all of these problems. Reforming them should be the highest priority," the report concluded. 

Share

Featured Articles

SAP creates new EMEA region and announces new President

SAP has announced it has appointed a new President for a newly-created EMEA region, aiming to make the most of the opportunities of cloud and AI technology

How SAP is facilitating continuous business transformation

Technology giant SAP has expanded its portfolio with the acquisition of LeanIX, a leader in enterprise architecture management (EAM) software

Siemens and Microsoft: Driving cross-industry AI adoption

To help businesses achieve increased productivity, Siemens and Microsoft are deepening their partnership by showcasing the benefits of generative AI

Sustainability must become central to corporate strategy

Sustainability

The endless benefits of putting your people first

Leadership & Strategy

Working from anywhere: SAP uncovers secret life of employees

Human Capital