The International Monetary Fund (IMF) has recommended that governments stop intervening through subsidies or tax cuts to alleviate the impact of rising energy prices.
On the other hand, the organization advocates that governments allow the increase in costs to be completely transferred to final consumers.
The IMF believes that this measure would really boost energy savings and transition to green energy by both households and businesses.
The IMF’s argument is that general measures should not be applied that benefit the whole of society or the productive fabric.
“Governments must allow the full rise in fuel costs to be passed on to end users to promote energy saving and the abandonment of fossil fuels”, the international institution has pointed out.
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Likewise, the IMF has expressed the need for the measures implemented to have a character of “specific reliefinstead of a general character.
In this way, the agency has advocated implementing transfers for low income householdswho are the ones who suffer most from the rise in energy bills, instead of measures aimed at setting price controls.
In this regard, the institution headed by Kristalina Georgieva has pointed out that, until now, European policy makers have responded to the rise in the cost of energy mainly with Containment measures of generalized prices, including subsidies, tax cuts and price controls.
This is the case of the Government of Spain. It should be remembered that since the increase in energy prices began in the middle of last year, the Executive has been applying generalized tax reductions on taxes that affect the electricity bill.
As the institution has published in an article, Europe must fit the bills of imports of fossil fuels due to the high costs registered in energy since last year.
Specifically, the institution points out that world oil prices doubled and coal prices almost quadrupled. On the other hand, the price of natural gas in Europe it rose almost seven times.
However, he has warned that preventing the pass-through to retail prices will simply delay necessary adjustment to the energy ‘shock’ by reducing incentives for households and businesses to save energy and improve efficiency.
On the other hand, these grants make it easier to maintain the world demand energy, causing prices to be higher than they would otherwise be.
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Likewise, the institution has recalled the increasing cost of these measures, which is reducing the already limited fiscal space of the countries. All this in a context in which high prices persist.
For these reasons, the IMF has recommended a shift towards “targeted” aid policies, including a income support for the most vulnerablewhose proportion of beneficiaries would vary between countries depending on social preferences and fiscal space.
On the other hand, it should be remembered that last Wednesday the UN urged taxing extraordinary profits obtained by oil and gas companies during the current energy crisis.
The secretary general of the institution, António Guterres, stated that these profits are “immoral” in the present context. He also called on governments around the world to use the proceeds of these taxes to “support the most vulnerable people.”
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