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Energy Subsidy Reform Policies and Implications in the MENA-region

In this research, Dr. AboElSoud and Dr. Elish from the British University in Egypt aim to assess the progress of current energy subsidies reform programmes initiated a few years ago and establish a policy framework for countries in the MENA-region. This is done by first identifying the impact of phasing out energy subsidies in the MENA. Second, by quantifying the impact of the ongoing process of energy subsidies removal on the economic growth and macroeconomic indicators in a chosen country and assess the policy implication through comparing the same impact to other countries that have applied energy subsidy reforms.

To assess the impact of subsidy reform policies and their implications on MENA countries the Synthetic control method is utilized. Chosen outcomes according to theoretical framework is assessed by comparing country X (treatment unit) from MENA region that applied energy subsidy reform in year t compared for countries (control unit) from other regions that applied/did not apply the subsidy reform in the same time t or any other t (Abadie, Diamond, and Hainmueller , 2010 ; and Adhikari, et al. , 2016). The base on which this case study from MENA is chosen is derived from data on Vagliasindi (2013) an IMF report on energy subsidy reform and investigating case studies from different sorts of countries that applied this reform. This report helps in choosing countries in our study based on different criteria then we apply the pre-treatment fit index method (Adhikari, B. ,et al. , 2016) to scrutinize the set of countries that we have chosen for the study and see which ones are a good fit for the outcome. The countries to compare to are countries categorized according to their level of development and/or consumption and energy dependency being net exporters or net importers. Additional criteria: Country characterized by macro imbalances (either budget deficit higher than 4 percent of gross domestic product [GDP] or public debt higher than 40 percent of GDP).


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