Fiscal Policy Responses to the Energy Price Shock – Session 1

A high-level discussion on macro-fiscal policy responses to energy price volatility

This workshop will serve as the first part of a two-part series examining the economic, fiscal, and policy implications of current global energy market developments, with a second session to follow.

The impending global energy price shock has the potential to create significant macro-fiscal pressures across advanced and emerging economies. For many developing countries in particular, higher and more volatile energy import costs could widen fiscal deficits, intensify inflationary pressures, weaken external balances, and increase risks to debt sustainability.

Governments now face urgent policy choices: how to protect households and productive sectors from rising costs, preserve fiscal space, maintain macroeconomic stability, and reduce future exposure to imported fossil fuel volatility. At the same time, the current environment presents a significant opportunity to accelerate the transition toward renewables, electrification, and more secure domestic energy systems.

Drawing on recent economic and energy market analysis, this convening will examine how macro-fiscal policy can respond to immediate pressures while supporting long-term structural resilience. Topics will include:

• Managing the macroeconomic (fiscal, debt, inflationary, currency, and external balance) impacts of energy price volatility
• Accelerating electrification and the transition toward renewables
• Financing grids, clean power, and industrial competitiveness in emerging markets through effective long-term policy frameworks
• Just transition policies, including taxation of windfall gains and strengthened social protection for affected households and workers