Indonesia, the World's Fourth Largest LPG Subsidizer

Economics & Macro

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Adi Ahdiat 29/08/2023 19:10 WIB

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According to IMF data, Indonesia was the fourth largest recipient of LPG subsidies globally in 2022, after China, India, and Russia.

Top 10 Countries with the Largest LPG Subsidies in the World (2022)

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Indonesia, the World's Fourth Largest LPG Subsidizer

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Top 10 Countries with the Largest LPG Subsidies in the World (2022)

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According to the International Monetary Fund (IMF), the global value of liquefied petroleum gas (LPG) subsidies reached US$157.16 billion in 2022.

This figure comprises "explicit subsidies" worth US$41.82 billion and "implicit subsidies" worth US$115.34 billion.

Explicit subsidies are direct government incentives that make the retail price of fuel cheaper than its supply price.

Implicit subsidies, on the other hand, are indirect incentives, such as reductions in consumption tax, exemptions from environmental taxes for fossil fuel users/industries, and so on.

In 2022, China was the country with the largest LPG subsidies globally, valued at US$54.89 billion, consisting of US$7.12 billion in explicit subsidies and US$47.77 billion in implicit subsidies.

Indonesia ranked fourth globally. According to the IMF, throughout 2022, the value of LPG subsidies in Indonesia reached US$8.47 billion, comprising US$3.69 billion in explicit subsidies and US$4.77 billion in implicit subsidies.

The IMF is now urging countries to evaluate their fossil fuel subsidy policies to reduce air pollution and mitigate the climate crisis.

"Eliminating explicit subsidies for fossil fuels and implementing corrective taxes such as carbon taxes could reduce global carbon dioxide (CO2) emissions by up to 43% by 2030," stated the IMF research team in their report, *IMF Fossil Fuel Subsidies Data: 2023 Update*.

In line with this, the Indonesian government plans to cut subsidies for 3-kilogram (kg) LPG cylinders starting next year.

"Starting January 1, 2024, only those who are registered will be allowed to purchase 3 kg LPG," stated the Ministry of Energy and Mineral Resources (ESDM) team in a press release on its official website (June 9, 2023).

Editor : Adi Ahdiat

"Disclosure: This is an AI-generated translation of the original article. We strive for accuracy, but please note that automated translations may contain errors or slight inconsistencies."