Oil Subsides impact on a government budget in Indonesia Iran and Essay

anele Subsides impact on a government budget in Indonesia Iran and Venezuela - Essay ExampleIt is worth noting that subsidies on fuel consumption have critical macro economical consequences and that many subsidies fail to serve their purpose therefore causing unsustainable development. This paper attempts to analyze oil subsides impact on a government budget in Indonesia Iran and Venezuela.Globally, all governments are greatly concerned with their sinew sectors because of the key role energy plays in the economic development. Energy consumption calls for public interventions such as use of direct grants and all sorts of tax fragment that are hidden in public and economic structures (Gavish & Gavish, 2012). Two-thirds of all subsidies flow to fossil fuels where subsidies to energy business are common in industrialized countries bit support to energy consumption dominate result countries (Davis, 2013). Different categories of subsidies have different impacts that include low en ergy prices that enhance overuse and waste while underpricing hurts energy producers. On the other hand, producer subsidies promote overproduction characterized by protection and quantity regulations that introduction further distortions in the local economy.Rationale to subsidize energy has always been to stimulate economic growth but the notion changed after the oil crises in 1970s. The growth motive was no longer considered cardinal because governments thought it necessary to safeguard domestic energy supply while developing countries subsidized energy consumption to fuel economic growth. According to Davis (2013), energy subsidies are believed to avert possible barriers to growth although this imagination has been proven ineffective especially in stimulating economic growth. According to Gavish & Gavish (2012), there are studies that designate that energy subsidies hamper economic growth and therefore eliminating them (subsidies) may provide incentives for a more high-octan e resource allocation and spur economic growth. Moreover, energy subsidies