International Monetary Fund (IMF) Recommends governments to stop intervening through subsidies or tax cuts to mitigate the effects of rising energy prices and instead allow growth to shift completely cost to end consumers To really promote the transition towards energy saving and green energy.
“They should allow the entire increase in fuel costs to be transferred to end users to encourage energy savings and the abandonment of fossil fuels,” the international body explained in an article. “Distinctive relief” character instead of general character.
As such, the IMF advocates implementing transfers for low-income households that are most affected by rising energy bills, rather than measures aimed at establishing price controls.
In this sense, the organization led by Kristalina Georgieva has pointed out that, so far, European policy makers have primarily responded to increased energy costs with generalized price control measures including subsidies, tax cuts and price controls.
However, he warns that stopping the pass-through for retail prices delays the necessary adjustments to the energy ‘shock’ by reducing incentives for homes and businesses to save energy and improve efficiency, while the global Energy demand and prices are also maintained to exceed prices. They would be otherwise.
Similarly, he recalled the rising costs of these measures, which are shrinking countries’ already limited financial space, while high prices remain.
For these reasons, the IMF has recommended a shift toward “specific” aid policies, including income support for the most vulnerable, whose proportion of beneficiaries will vary between countries based on social preferences and financial location, but which is defined as such. should be designed such that the benefits are gradually reduced at higher income levels.
