Impact of subsidy reform on the kingdom of Saudi Arabia's economy and carbon emissions

Sarrakh, Redouane; Renukappa, Suresh; Suresh, Subashini; Mushatat, Sabah

doi:10.1016/j.esr.2020.100465

Cited by 41 publications

(17 citation statements)

References 19 publications

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“…Gasoline, electricity, natural gas, desalinated water, and agriculture have been heavily subsidised in the past, but subsidy reform and increases in VAT are now underway in the region, in part to tackle high consumption levels. These changes are already showing results with a reduction in energy and water use and may positively contribute to the net-zero transition 126,152,153,159 . The full impact of net-zero initiatives on food supply is uncertain; clearly, costs will increase if a global carbon tax is applied to international freight.…”

Section: Ai How Different Demographic and Ethnographic Groups Would Be Impacted By A Net Zero Transitionmentioning

confidence: 96%

“…In the wake of the dramatic fall of international oil prices in 2014, in July 2015 the UAE implemented major changes to fuel prices (gasoline and diesel), essentially removing subsidies and implementing a federal-level fuel price, adjusted monthly, based on international prices. Additionally, both UAE and KSA have begun reducing electricity and water subsidies and are attempting to implement more cost-reflective tariffs, reducing wastage and improving the business case for energy/water efficiency [151][152][153] . Additionally, to enhance resilience to the extreme temperatures of climate change, governments will need to undertake emergency public health planning, ensure public awareness of the risks, and make provision to move vulnerable people into air-conditioned locations, etc.…”

Section: CII Current/future Solutions Which Have the Potential To Satisfy This Country's Adaptation Needs Including Transformationmentioning

confidence: 99%

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COP26 Visions for a Net Zero Future – Regional Profile for the Arabian Peninsula

Short

Molini

Santamarina

et al. 2021

Preprint

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This regional profile for the Arabian Peninsula was developed in the context of the BEIS COP26 Visions for a Net Zero Future project. It covers the United Arab Emirates (UAE) and the Kingdom of Saudi Arabia (KSA), and has been developed with the input from in- country academic experts Prof. Annalisa Molini and Mr Luiz Friedrich (Khalifa University, UAE) and Prof. Juan Carlos Santamarina (King Abdullah University of Science and Technology, KSA). It sets out a synthesis of the available evidence base on regional challenges and opportunities for mitigation, adaptation, and resilience measures for both KSA and UAE and the wider Arabian Peninsula associated with climate change and a global transition to an inclusive, desirable, and resilient net-zero future.

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Section: Ai How Different Demographic and Ethnographic Groups Would Be Impacted By A Net Zero Transitionmentioning

confidence: 96%

Section: CII Current/future Solutions Which Have the Potential To Satisfy This Country's Adaptation Needs Including Transformationmentioning

confidence: 99%

COP26 Visions for a Net Zero Future – Regional Profile for the Arabian Peninsula

Short

Molini

Santamarina

et al. 2021

Preprint

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“…Several previous studies have examined the impact of energy subsidy on economic growth (Kpodar, 2006;Foster and Steinbucks, 2009;IMF, 2013;Solaymani and Kari, 2014;Mundaca, 2014, Valadkhani et al, 2014Olufemi, 2015;Dennis, 2016;Kimura, 2016;Mlachila et al, 2016;El Hamidi, 2016;Pershin et al, 2016;Li et al, 2017;Hussein, 2018;Rademaekers et al, 2018;Sarrakh et al, 2020;Solarin, 2020). These studies have demonstrated that economic growth is significantly affected by the energy subsidies reform through many channels as shown in Figure 1.…”

Section: Literature Reviewmentioning

confidence: 98%

“…As for the second point of view, it believes that the energy subsidies reform has negative impacts on the economic growth due to the accompanying inflationary pressures, in addition to the political considerations which might damage the economy, not to mention that such reform could hinder the investment because of the high costs of production (Fattouh and El-Katiri, 2015;Verme, 2016;Sarrakh et al, 2020;Aghaei and Lawell, 2020).…”

Section: Introductionmentioning

confidence: 99%

The Impact of Energy Subsidy Reform on Economic Growth in Egypt Over the Period From 2013 to 2020

Mostafa

2021

IJEEP

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In most developing countries, and the Middle East region in particular, "Energy Subsidy" is an issue of special importance for policymakers. To this day, there are no conclusive results concerning the possible impacts of the energy subsidies reform on economic growth. On this basis, this current study aims to examine the impacts of the energy subsidies reform on the economic growth in Egypt. To achieve the study's objective, the impacts of the energy subsidies reform have been divided into the following: (a) indirect impacts: estimated through the use of AMOS OR WARP PLS program, and (b) direct impacts: determined on basis of the Autoregressive Distributed Lag Model. So, this study evaluates the indirect effects of energy subsidy reform on economic growth. So, this current study has concluded that the energy subsidies reform in Egypt has significant negative effects on economic growth in both the short and long terms, whether they are direct or indirect impacts. Therefore, this research recommends that when it comes to reducing the energy subsidies, the Egyptian government shall adopt a lenient approach, to avoid the relevant negative impacts; thus, such measures shall be executed over many stages that extend for a longer period of time, with the provision of a social fund that supports the low-income people more comprehensively.

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“…OP change governs the unemployment status and is influenced by the economic growth rate and explains government measures' efforts. Sarrakh et al (2020) found that removing the subsidies from the energy sector would negatively affect the Saudi GDP. The suggested compensatory measures to cover the low-income households applying the social security network to face the oil price volatility.…”

Section: Literature Review and Hypothesesmentioning

confidence: 99%

Governance of public spending avenues by oil prices, oil revenues, and GDP in Saudi Arabia: proportionate sensitivity and trend analysis

Anis

2020

Investment Management and Financial Innovations

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Saudi Arabia is a petroleum resource-rich country, and half of the GDP of Saudi Arabia is based on the Oil Sector Revenue (OSR). The OSR is governed by the Oil Prices (OP), while GDP is also affected by the OSR in petroleum exporting companies. The volatility of OP governs the OSR and GDP positively and perfectly as the oil sector contributes approximately half of the GDP of Saudi Arabia. The study analyzes the governance of the Public Spending Avenues (PSA) by the OP, OSR, and GDP in the long and short run and based on the secondary data taken from the website of the Saudi Arabian Monetary Authority (SAMA). Coefficient of Variations (CV), Chain-based Index (CBI) numbers, Fixed-based Index (FBI) numbers, and Analysis of Variances (ANOVA) of OP and other dependent variables calculated to get the normality, sensitivity, trend, and significance difference among the sensitivity and trend of variables, while Pearson’s correlations establish the cause-effect relationship among the variables. The study reveals that oil price volatility does not affect the OSR, GDP, and ultimately public spending in the long run. However, there is governance of volatility of OP that can be seen on OSR, GDP, and ultimately on PSA in the short run. Saudi Arabian government enhances its spending on PSA and especially on education while lowering the OP. There is a need to diversify the income resources to minimize the reliability of oil prices and budget deficit and consider the sensitivity of oil prices on the economy by the policymakers to formulate the policies to minimize the impact of volatility of OP on the economy. AcknowledgmentThe author would like to thank the Deanship of Scientific Research, Prince Sattam Bin Abdulaziz University, Saudi Arabia. &nbsp;

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Impact of subsidy reform on the kingdom of Saudi Arabia's economy and carbon emissions

Cited by 41 publications

References 19 publications

COP26 Visions for a Net Zero Future – Regional Profile for the Arabian Peninsula

COP26 Visions for a Net Zero Future – Regional Profile for the Arabian Peninsula

The Impact of Energy Subsidy Reform on Economic Growth in Egypt Over the Period From 2013 to 2020

Governance of public spending avenues by oil prices, oil revenues, and GDP in Saudi Arabia: proportionate sensitivity and trend analysis

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