Friday, July 19, 2013

From oil subsidies to cash transfers in Libya

Rolling back the (oil) subsidies is a tricky business, but it can and must be done. Some countries, such as Jordan and Yemen, have already taken painful measures and so far survived the consequences. Libya, too, has been surprisingly bold for a country where petrol has been cheaper than water for a generation. Its current budget provides for sharply higher petrol and electricity prices and a shift in the subsidies to monthly cash transfers of about $500 per citizen. “It sounds like a lot, but this will actually save the government a ton of money,” says Faisal Gergab, chief economist at the Libyan Investment Authority.
That is buried deep within the Economist's special report on the Arab Spring, but it's an impressive and exciting policy reform.  If the measure succeeds, perhaps other other developing countries will follow suit.  This would be a very positive development, both economically and environmentally.  

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