Oil & Gas Saudi Arabia has highest fuel subsidies per capita in G20 By Andrew Hammond August 30, 2023 Reuters/Fahad Shadeed A petrol station in Riyadh. Saudi fuel subsidies represent 27% of GDP Almost $7,000 per person in 2022 Kingdom also top spender by percentage of GDP Turkey spent $1,792 per person, says IMF Saudi Arabia is by far the highest provider of fuel subsidies per capita among the G20 advanced economies, the IMF said this month as it called for fossil fuel price reforms to reduce carbon emissions. The IMF Fossil Fuel Subsidies Data: 2023 Update working paper said Saudi Arabia spent almost $7,000 per person in 2022. This was more than double the amount spent by the second highest subsidiser in the G20, South Korea. The kingdom was also the highest spender as a percentage of GDP at 27 percent, behind Russia at 23.6 percent. Iran, which is not in the G20, is spending 27.2 percent on fuel subsidies, according to the IMF. Saudi Arabia’s markets to feel petrochemicals slump Saudi oil exports lowest since September 2021 G7 should opt for fuel tax cut over price cap, says Saudi-based analyst Turkey, the only other Mena country in the G20, spent $1,792 per capita in 2022, or 15.2 percent of GDP. The world's second largest oil producer after the US, Saudi Arabia has rejected pressure at UN climate change conferences to do more to reduce fossil fuel emissions, touting its heavy investments in renewable energy. China remains the biggest subsidiser of fuels in absolute terms, with a total spend of $2.2 trillion in 2022. It is followed by the US, Russia, the European Union and India. The IMF figures are based on two forms of subsidy: explicit subsidies, which involve undercharging for the supply costs of fossil fuels, and implicit subsidies, which covers undercharging for environmental costs and unrealised consumption tax revenues. Although explicit subsidies make up only 18 percent of the total, they have more than doubled since 2020, it said. Total fossil fuel subsidies were put at $7 trillion in 2022, or 7.1 percent of global GDP. “Full fossil fuel price reform would reduce global carbon dioxide emissions to an estimated 43 percent below baseline levels in 2030,” the report predicted. Saudi Arabia said in 2021 that it would join a global initiative to slash emissions of methane by 30 percent from 2020 levels by 2030. But its net zero goal for emissions of greenhouse gases, mostly produced by burning fossil fuels, has been set at 2060 – 10 years later than the United States, which wants Riyadh to do more. Reducing energy subsidies is a Vision 2030 goal but the IMF – which has no leverage over Saudi Arabia – pointed out last year that low energy prices have given it a “comparative advantage” in its economic diversification strategy. With oil prices back at the high end, the temptation to maintain that comparative edge and help ordinary citizens is strong. The government imposed a petrol price cap in 2021 in an effort to help kick-start the economy after the initial blow of the Covid-19 pandemic.