Governments around the world take steps to cut fuel subsidies and boost their economies

News from Angola – On the global stage, governments are facing the challenge of balancing their budgets and promoting sustainable economic growth. One of the measures adopted by several nations is the cut in fuel subsidies, which have a significant impact on public finances and the well-being of the population.

Venezuela’s immense and tragic economic disaster can be copied by other countries. An example of the moment is the case of Angola, a country that for years has been affected by the weight of these subsidies in its economy. With annual spending amounting to around US$5 billion and steadily increasing over the past decade, the Angolan government is at a crossroads.

Keep bleeding the economy to benefit a minority? Or put an end to this party of the few and adjust the course of the economy? Interestingly, in 2015 Angola successfully reformed. Prices have been released to follow the market. But no one explains why or how the subsidies came back and are still draining good resources for “nothing”.

doesn’t work anymore

The fuel subsidy, which in its beginnings may have been beneficial to the general population, has become a measure that only benefits a privileged minority. This scenario of inequality, combined with the lack of courage and intelligence on the part of economic leaders, led the Angolan economy to an unsustainable situation.

According to experts, postponing the decision to cut these subsidies has serious consequences.

Former Minister Ailton Barcelos-Fernandes, (once Minister of Industry and Commerce, and a second time Minister of Agriculture in Brazil) highlights three fundamental mistakes:

1.Serious loss of economic growth opportunities,

2 Serious fiscal imbalance and indebtedness, often

irreversible

3. Structural injustice, in addition to the growing aggravation of social inequality and poverty.

Ailton Barcelos-Fernandes claims that subsidizing fossil fuel is going against the grain of the sustainable world. Even though countries will be evaluated for their ability to create policies for the preservation of the environment, public transport, education and health to transform citizens into agents of competitiveness.

To avoid an imminent crisis, Angola is approaching the so-called “Point of Safe Return” (PSR), the point of safe return, where, beyond that point, the reversal of the situation becomes increasingly difficult.

Ailton Barcelos-Fernandes claims that subsidizing fossil fuel is going against the grain of the sustainable world. Even though countries will be evaluated for their ability to create policies for the preservation of the environment, public transport, education and health to transform citizens into agents of competitiveness.

To avoid an imminent crisis, Angola is approaching the so-called “Point of Safe Return” (PSR), the point of safe return, where, beyond that point, the reversal of the situation becomes increasingly difficult.

This situation, however, is not unique to Angola, as other countries have already faced similar challenges. Venezuela is already past the “PSR”.

At the beginning of the Pandemic, the USA adopted subsidies, but in less than 10 months it withdrew them.

By comparison, those in Angola have lasted nearly a decade. Other countries like Iran, Nigeria and Indonesia adopt it. United States, Canada, Australia, United Kingdom and Germany opt for fluctuation and market economy.

Countries that love and those that haven’t adopted subsidies

O Brazil adopted in the recent government of President Dilma Rousseff and it was a disaster. Petrobras almost went bankrupt and generated thousands of unemployed.

Angola it has fuel subsidies, which have been a significant burden on its economy. These subsidies have been in place for at least a decade, with annual spending of around $5 billion.

USA have no fuel subsidies at the federal level. Fuel prices are determined by the market, directly reflecting supply and demand.

Ailton Barcelos-Fernandes

Former Minister of Industry and Commerce Former Minister of Agriculture of Brazil.