Economy 07-11-2018

International Monetary Fund warns about the return of fuel subsidies

According to the entity, these aids encourage the burning of fossil fuels, and warn of their environmental implications.

The increase in oil prices observed this year has brought with it an unwelcome guest: fuel subsidies.

That is the concern of the Director of the International Monetary Fund, Christine Lagarde, who questions whether the State's money used to compensate for higher fuel prices and encourage consumption could be better used.

Nations from Brazil to India have re-established subsidies or eliminated taxes, while in the country of origin of Lagarde, France, the government has kept taxes on fuel despite the protests.

After oil prices plummeted in 2014, some of those same countries eliminated fuel subsidies and agreed to set a price for carbon emissions, Lagarde said at the New Economy Forum in Singapore.

Governments must ask themselves if they want to use their resources to encourage people to burn fossil fuels, or to finance things like education and health services.

"Some countries have made a good choice in easy times. As it becomes difficult, there is a great temptation to re-establish subsidies and continue to help people burn fossil fuels, "said Lagarde.

Good news for Lagarde: while world oil prices rose almost 30% this year until October 3 , they have lost part of those gains in the last month.


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