SUBSIDY REFORM

 Dead Weight Loss

Efficiency Loss

Consumer Subsidy

Producer Subsidy

Price Gap Approach

Inventory Approach

Pre-tax Subsidy

Post Tax Subsidy

Pass Through

Electricity Subsidy

Normative losses

Excess Loss

Cost Recovery Price

Average Tariff

Economic and Social implication

        Reduced Investment

        Diminished Competitiveness of Private Sector

        Crowding out Effect

        Increased Smuggling

Public Finances Impact

Balance of Payments

Environent and Society

Direct Effect

Indirect Effect

Sobsidy Reform Requirements

Long Term Objectives and an analysis of impact of reforms

Transparent and extensive communication and consultations with stakeholders on size of subsidies and the effects on the budget

Price increased that are phased in over time

Improving the Efficiency in State owned Enterprsures to reduce Producer Subsidies

Measures  to protect the poor through cash and near-cash transfers

Institutional Reforms that depoliticize Energy Pricing,such as introduction to automatic price mechanisms

Estimating Corrective Taxes

Externalities due to pollution use

Non pollution externaities from motor vehicles

BARRIERS TO REFORM

Information

Government credibility

Concerns about fiscal impact

Inflation,price volatility and competitiveness

Unfavorable macroeconomic conditions

Opposition from interest groups

A SUCESSUL REFORM STARTEGY

Price SmoothingMechanism

Targeting Mechanisms