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

Oil Subsides impact on a government budget in Indonesia Iran and Venezuela - study ExampleIt is worth noting that subsidies on fuel consumption have critical macroeconomic consequences and that many subsidies fail to serve their purpose thus causing unsustainable development. This composition attempts to analyze oil subsides impact on a government budget in Indonesia Iran and Venezuela.Globally, all governments are greatly concerned with their pushing sectors because of the key utilisation energy plays in the economic development. Energy consumption calls for public interventions such as use of direct grants and all sorts of tax break that are isolated in public and economic structures (Gavish & Gavish, 2012). Two-thirds of all subsidies flow to fossil fuels where subsidies to energy production are common in industrialized countries while support to energy consumption dominate developing countries (Davis, 2013). Different categories of subsidies have different impacts that includ e low energy 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 trigger further distortions in the local economy.Rationale to subsidize energy has continuously been to stimulate economic growth but the notion changed after the oil crises in 1970s. The growth motive was no longer considered important because governments thought it requirement to safeguard domestic energy supply while developing countries subsidized energy consumption to fuel economic growth. According to Davis (2013), energy subsidies are believed to debar possible barriers to growth although this concept has been proven ineffective especially in stimulating economic growth. According to Gavish & Gavish (2012), there are studies that show that energy subsidies gag economic growth and therefore eliminating them (subsidies) may provide incentives for a more efficient r esource allocation and spur economic growth. Moreover, energy subsidies