IMF: Reducing fuel taxes does not stop energy price increases

The International Monetary Fund (IMF) has warned European governments to avoid temporary measures, such as reducing fuel taxes, to cope with high energy prices caused by conflicts in the Middle East.

In a recent briefing, the IMF emphasized that these measures are ineffective and poorly targeted, disproportionately benefiting higher-income households. The institution believes that these measures are inefficient and poorly designed, mainly favoring high-income households. The conclusions are based on the experience of the energy crisis triggered by the invasion of Ukraine, when widespread support proved difficult to withdraw and reduced the motivation for energy savings. The IMF highlights that, in 2022, European governments allocated an average of 2.5% of GDP for energy aid, most of it without clear targeting.