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Subsidies and cross-subsidies in the energy sector are common throughout Eastern Europe and Central Asia. In Belarus, revenues from an industrial tariff on electricity are used to cross-subsidize heating for households. Input-output (IO) data and a household consumption survey are used to analyze the distributional impacts of this cross-subsidization. This paper illustrates cost shares and electricity-intensity of different sectors and consumption categories and uses the IO data to obtain first-order estimates of the distributional incidence of policy reform. The paper then analyzes distributional impacts of subsidy reform with a Computable General Equilibrium model. Although poorer households benefit from reduced heating costs, the increase in prices of other consumer goods due to higher electricity prices more than offsets the benefits they receive from the subsidies. The analysis finds that the current cross-subsidies are regressive, and policy reform would be highly progressive.

Agriculture --- Approach --- Banking --- Benchmark --- Benchmark data --- Capital --- Capital returns --- Commodities --- Commodity --- Communication --- Competition --- Consumer demand --- Consumer good --- Consumer goods --- Consumer groups --- Consumer prices --- Consumers --- Consumption --- Cost increase --- Cost of electricity --- Cost of funds --- Costs --- Customer --- Customers --- Demand --- Developing economy --- Development policy --- Distribution --- District heating --- Domestic market --- Domestic price --- Economic cooperation --- Economic development --- Economic statistics --- Economic systems --- Economic theory & research --- Economics literature --- Elasticity --- Elasticity of substitution --- Electricity --- Electricity prices --- Emerging markets --- Energy --- Energy price --- Energy prices --- Energy production and transportation --- Equilibrium --- Equilibrium analysis --- Equilibrium price --- Equilibrium prices --- Exchange --- Expenditure --- Expenditures --- Export market --- Exports --- Externalities --- Factors of production --- Foreign exchange --- Fossil --- Fossil fuel --- Fuel --- Fuels --- Functional forms --- General equilibrium analysis --- Goods --- Heat --- Household analysis --- Income --- Income group --- Income groups --- Income levels --- Incomes --- Inputs --- Intermediate goods --- International markets --- Inventory --- Macroeconomics and economic growth --- Marginal cost --- Market --- Markets --- Markets & market access --- Multipliers --- Natural resources --- Oil --- Oil products --- Optimization --- Output --- Outputs --- Payments --- Perfect competition --- Price --- Price change --- Price changes --- Price index --- Price levels --- Prices --- Pricing --- Pricing policy --- Pricing scheme --- Private sector development --- Product --- Production --- Production costs --- Production function --- Production functions --- Production increases --- Production of coke --- Production structure --- Products --- Rate of return --- Real estate --- Rent --- Residential energy --- Revenue --- Savings --- Share --- Shares --- Subsidies --- Subsidization --- Subsidy --- Substitute --- Substitutes --- Substitution --- Supply --- Supply costs --- Tariff --- Tax --- Tax rate --- Tax rates --- Taxes --- Theory --- Total output --- Trade --- Transition economies --- Transport --- Transport economics policy and planning --- Trends --- Utility --- Utility functions --- Value --- Value added --- Variables --- Wealth --- Welfare