Monetary Fund: Fuel subsidies around the world rose to $7 trillion

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The International Monetary Fund said Thursday that the governments of the countries of the world provided subsidies to consumers worth $ 7 trillion for fossil fuels in 2022, reaching a new record.

The fund indicated in a report that governments supported consumers and companies to mitigate the effects of the global rise in energy prices resulting from the Russian invasion of Ukraine and the economic recovery from the Corona epidemic.

The volume of global fuel subsidies around the world rose by 18.6 percent last year from $5.9 trillion in 2021.

The Fund stated that oil, coal and natural gas subsidies cost the equivalent of 7.1 percent of global GDP, which is more than governments spend annually on education (4.3 percent of global income) and about two-thirds of what they spend on health care (10.9 percent).

It continued: “This comes at a time when the world is struggling to limit global warming so that it does not exceed 1.5 degrees Celsius, and parts of Asia, Europe and the United States are suffering from extreme heat.”

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The Fund believes that reducing subsidies would reduce air pollution, generate revenue, and contribute significantly to slowing climate change.

The fund’s findings come as the World Meteorological Organization says July was the hottest month on record, underscoring the urgent need to limit human-caused climate change.

According to the report, fossil fuel consumption imposes huge environmental costs, mostly caused by local air pollution and the damage caused by global warming.

The fund believes that if governments eliminate subsidies and impose corrective taxes, fuel prices will rise.. “This would prompt businesses and households to consider environmental costs when making consumption and investment decisions.

It revealed that the result would be a significant reduction in global carbon dioxide emissions, cleaner air, fewer lung and heart diseases, and more fiscal space for governments.

The fund estimated that eliminating explicit and implicit fossil fuel subsidies would prevent 1.6 million premature deaths annually and increase government revenues by about $4.4 trillion.