China, USA, India, Russia Lead $1.3trn Global Fuel Subsidy Spend in 2022

China, the United States of America, Russia, and India accounted for the most in a $1.3 trillion global spend, providing temporary subsidies to cushion the rising cost of fuel prices, a new report by the IMF has said.

The Fund in its report titled “IMF Fossil Fuel Subsidies Report said explicit subsidies have more than doubled since the previous IMF assessment, from $0.5 trillion in 2020 to $1.3 trillion in 2022, with sharply higher international fossil fuel prices.

The report, which tracked data in 170 countries also stated that globally, total fossil fuel subsidies amounted to $7 trillion in 2022, equivalent to nearly 7.1 percent of global Gross Domestic Product, GDP.

‘‘However, much of the increase is due to temporary price support measures, and hence explicit subsidies are expected to decline if international prices continue receding from their peak levels.

‘‘Implicit subsidies are projected to rise in the baseline as the share of fuel consumption in emerging markets (where local environmental costs are generally larger) continues to climb.”

The report noted that the differences between efficient prices and retail prices for fossil fuels are large and pervasive across fuels, but especially for coal.

“Globally, 80 percent of coal consumption was priced at below half of its efficient level in 2022. ‘‘Underpricing for local air pollution and global warming account for nearly 60 percent of global fossil fuel subsidies and underpricing for supply costs and transportation externalities (such as congestion) explains another 35 percent (the remainder is accounted for by forgone consumption tax revenue), it stated.

According to NNPC Ltd, Nigeria spent N4.39 trillion on a petrol subsidy in 2022.

August 24, 2023