IMF calls for cut in fossil energy subsidies amid low oil prices

Falling oil prices provide a golden opportunity to reduce inefficient fossil energy subsidies in favor of more productive and equitable spending, said the International Monetary Fund (IMF) in a newly-released report Wednesday.

"Energy tax reform could help reduce negative externalities caused by energy consumption, such as pollution and global warming and provide breathing room for growth-enhancing tax reforms -- for example, by lowering taxes on labor to boost employment," said the IMF in its Fiscal Monitor report.

"In developing economies, further reform of energy subsidies could provide space for productive spending on education, health, and infrastructure, as well as for programs to benefit the poor," said the report.

Fossil-fuel subsidies totaled 550 billion U.S. dollars in 2013, more than four times those to renewable energy, said the International Energy Agency at the end of last year.

The report said the lower international oil prices will benefit the world economy as a whole, but it will hurt the public finance of those oil exporters, mainly emerging and middle-income economies.

The fiscal loss associated with lower oil prices is estimated to average 4 percent of gross domestic product (GDP) this year. Country estimates range from close to zero to more than 25 percent of GDP, depending on the contribution of oil revenues to fiscal revenues, said the report. Endite