Fuelling inequality: The gendered impacts of World Bank and IMF fuel subsidy removal

The elimination of fuel subsidies was a central plank of World Bank and IMF structural adjustment programmes of the 1980s and 1990s, designed to liberalise trade regimes and ‘open up’ domestic markets to foreign producers. Criticised at the time for producing rocketing fuel prices and entrenching poverty, fuel subsidy reform is back on the agenda as part of the World Bank and IMF’s climate strategies – now rebranded as policies which lower emissions and are in the interests of those facing poverty, women and marginalised groups. 

Despite their arguments that fuel subsidies are regressive, and that their removal can enhance social spending and contribute to countries’ national climate goals, BWP’s new report finds that the Bank and Fund focus primarily on removing consumer subsidies as part of broader austerity measures, rather than addressing subsidies that sustain fossil fuel production, which makes the evidence for their claims extremely questionable.

Key findings:

• Women, girls and other marginalised groups bear the heaviest costs. Rising prices increase inequality, unpaid care burdens, and demand for additional work, while negatively affecting health, wellbeing, and access to fuel, food, transport and housing. Mitigation measures structurally fail to address these harms. 
• The IMF and World Bank’s arguments that subsidies are regressive and that their removal can create fiscal space that can enhance social spending is not borne out in Kenya, Egypt and Bangladesh, where social spending has collapsed under the weight of foreign debt repayments. Crucially, the Bank and Fund largely ignore the impact of these policy measures on unpaid labour and care work. More broadly, neither the Bank nor Fund consistently publishes credible analyses of the gendered impacts of these policies.
• Consumer subsidy removal has had negligible effects on fossil fuel consumption and reducing emission. By leaving producer subsidies untouched, Bank and Fund policies reinforce a ‘derisking’ model that promotes privatisation of national energy systems, benefiting private producers rather than enabling ‘whole of economy’ energy transitions. 

This report is a joint project between BWP’s Gender Equality and Macroeconomics Project and its Environment Project. If you would like to learn more about this research or our work on these issues please email Tara Povey, GEM Joint Coordinator, or Jon Sward, Environment Project Manager, or check our advocacy areas below.