This September, the International Monetary Fund (IMF) released the working paper The Unequal Benefits of Fuel Subsidies: A Review of Evidence for Developing Countries, reviewing research on the distributional impact of fuel-subsidy reform on household welfare in twenty developing countries, ranging across Africa, Asia, the Middle East and Latin America.
 
The paper concludes that, on average and in absolute terms, the top income quintile captures six times more in subsidies than the bottom. The burden of subsidy reform, however, in relative terms, is neutrally distributed across income groups, as lower quintiles spend a larger percentage of their income on energy: a US$ 0.25 decrease in the per liter subsidy results in an average 6% decrease in income for all groups, with more than half of this effect arising from the indirect impact on the prices of other goods and services consumed by households.

The paper also discusses issues that need to be addressed when undertaking subsidy reform, in particular emphasizing the need to mitigate adverse impacts on the poor, the importance of public information campaigns and the introduction of new fuel-pricing mechanisms.

It can be downloaded from the IMF’s website: http://www.imf.org/external/pubs/cat/longres.cfm?sk=24184