UN warns global fuel subsidies could exceed 1 trillion dollars as Iran war drags on
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The United Nations, or UN, says governments around the world are running out of room to shield consumers from higher energy prices caused by the Iran war and other crises, and estimates that the fuel subsidies governments worldwide must shoulder could exceed 1 trillion dollars this year. A report from the United Nations Development Programme, or UNDP, released today, says government interventions worldwide to cushion the impact of rising food and energy prices will become harder to sustain because of higher borrowing costs and an El Niño phenomenon that looks set to be the strongest on record. The UNDP warns that the next two to three months will be an especially critical period for governments using price caps, subsidies and tax breaks, because oil prices approaching 100 dollars a barrel, combined with higher borrowing costs, are adding pressure to already strained budgets. If governments do not act, an additional 130 million people could be living below the poverty line this year, defined as those earning less than 6.85 dollars a day. The UNDP's analysis, drawing on data from the World Bank, the International Monetary Fund and the International Energy Agency, found that the number of countries adopting various forms of relief measures nearly doubled between April and September, as the war's effects continued to unfold. A further September survey of 26 UNDP offices worldwide found that 25 expected the Middle East crisis to remain a key issue or grow more important over the next six months, while every UNDP office shared the same view that the situation is likely to worsen further. The UNDP report also says that in September, higher energy prices contributed to protests and social unrest in at least 10 countries, including Syria, Guatemala, the Philippines, France and Portugal.