European Union governments continue to spend billions to temper energy price increases, but a large part of these measures reach the population in an undifferentiated manner and risk creating larger long-term problems.
Interventions are politically appealing but hard to withdraw and can become a burden on public budgets, as shown by an analysis by the IMF, cited by Financial Times.
Approximately two-thirds of the subsidies and tax reductions introduced in the EU to mitigate the impact of high energy prices are not targeted towards vulnerable categories, according to data from the International Monetary Fund.
Aid for all, including in Romania
Amid public pressure generated by high bills, European governments have intervened through tax reductions and support schemes for the population and companies, including in Romania, where authorities have adopted similar measures.
However, the IMF warns that these "universal" policies are inefficient and costly, as they distribute resources to both households in need of support and those with high incomes.
"Remove the price signal and remove the incentive"
The institution warns that artificially lowering energy prices distorts the market and discourages changes in consumption behavior.
"When you have these price increases, it would suggest a shift to alternative energies. By removing the price signal, you eliminate this incentive," explains Alfred Kammer, director of the IMF's European department.
In other words, measures designed to protect consumers in the short term can have opposite effects, maintaining high consumption and delaying the transition to cheaper and more sustainable energy sources.
Hard-to-reverse measures: "Lessons from previous crises are not learned"
Another major risk is that these interventions, although introduced as temporary, quickly become difficult to eliminate.
He emphasized that once implemented, even limited measures become hard to reverse, leading to accumulating costs over time.
Risks for budgets and market reactions
The IMF warns that expanding these schemes could have serious consequences for public finances.
Even if the initial impact seems low, maintaining general measures can lead to an increase in the deficit and a negative reaction from financial markets.
Moreover, costs can escalate rapidly if energy prices remain high, turning temporary interventions into a structural burden for state budgets.
IMF recommendation: targeted and time-limited support
In this context, the institution recommends that aid be strictly targeted towards vulnerable households and limited in time.
The current approach, based on general measures, risks consuming significant resources without efficiently solving the problem and without encouraging the economy to adapt to new market conditions.