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Energy Subsidy Reform in the Republic of Moldova

Energy Affordability, Fiscal and Environmental Impacts

image of Energy Subsidy Reform in the Republic of Moldova

This report looks at the fiscal, environmental and social impacts of energy subsidy reform in Moldova with a particular focus on energy affordability. Reduced value added tax (VAT) rate on natural gas consumption and a VAT exemption on electricity and heat consumption by domestic users represent the largest fossil-fuel consumer subsidies in Moldova. Reforming these will imply an increase of the VAT rate, which will lead to an increase of gas, electricity and heat tariffs for households, and will in turn affect household consumption levels, related expenditures and energy affordability. If reform measures are to work, they will need to be accompanied by a carefully-designed social policy to protect poor households.

English Romanian

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Modelling the impacts of energy subsidy reform in Moldova

This chapter introduces an Excel-based model designed to analyse the reform of the subsidy to households through a reduced value-added tax (VAT) rate on electricity, natural gas and heat. The chapter also discusses the social impact of the reform on poor households in relation to the six compensation scenarios identified earlier in the analysis, as well as the environmental and fiscal consequences of the reform.

English Romanian

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