The World Bank says pumping money to subsidise fuel prices may be preventing governments like Malaysia’s from spending enough on social programmes and initiatives that would benefit the poor.
In a report released by the World Bank in Washington DC yesterday, it’s revealed that fuel subsidies are highest in the Middle East and North Africa, where they account for more than 4% of gross domestic product (GDP). This is in contrast to the 1% of GDP spent on social safety net programmes such as conditional cash transfers.
According to The Malay Mail Online, the report goes on to say that fuel and energy subsidies “mostly have an impact on the upper-income groups in the population, who are more likely to be consuming electricity and fuels in larger quantities.” The emphasis on these subsidies may deprioritise other types of spending, which would explain the lower amounts of funds spent on social safety nets.
The bank’s report found that less than a third of people living under conditions of extreme poverty are covered by social transfer programmes.
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