A report published in partnership between KPMG and the World Government Summit: Rationalizing targeted support is a pillar for enhancing financial resilience, social justice and sustainability.

Dubai, 3 February / WAM / A new report issued by KPMG in cooperation with the World Government Summit, under the title “Rationalizing Support to Enhance Spending Efficiency and Economic Sustainability,” indicated that rationalizing support, in light of the increasing financial pressures that governments in the Middle East and the world are facing, growing climate commitments, and rising demand for public spending, is one of the most influential policy tools to enhance economic resilience in the long term, while maintaining targeted protection for eligible groups.

This joint report was launched as part of the World Government Summit 2026, which will be held in Dubai from February 3 to 5, and reviews ways to enable governments to improve financial efficiency, enhance social justice, and support climate goals, in line with the summit’s themes related to global governance and effective leadership.

According to the report, the volume of global support reached an estimated US$7 trillion in 2022, i.e. more than 7% of global GDP, with energy support accounting for the largest share of this support.

Despite the role that support has historically played in alleviating price fluctuations and protecting consumers, the report shows that untargeted support imposes increasing burdens on public budgets, achieves greater gains for the highest income groups, and limits incentives related to the efficient use of resources.

This debate has been embodied in practice for years. For the UAE and the Gulf Cooperation Council countries, over the past decade, governments in the region have implemented deliberate reforms in pricing policies, linked fuel prices to global markets, and implemented differentiated tariff structures supported by targeted social protection mechanisms. These steps contributed to strengthening financial discipline and raising economic efficiency, while maintaining social cohesion.

The report refers to the “triple impact” of subsidy reform, highlighting opportunities for governments to achieve simultaneous gains in fiscal resilience, social justice, and environmental outcomes, through a carefully considered, gradual approach.

The results show that increased flexibility and efficiency in managing budgets allows resources to be directed toward long-term priorities such as infrastructure, education, and health care.

At the same time, improving targeting contributes to enabling governments to direct support to the groups most affected by price changes, while aligning prices with their actual cost enhances consumption efficiency and rationalization of resources, which supports the goals of sustainability and climate action at the national level.

Instead of proposing to lift subsidies completely or suddenly, the report presents an organized framework for strategic subsidy reform based on gradual adjustment of prices, expanding targeted social protection networks, enhancing transparency in communication, and ensuring effective institutional coordination.

International and regional case studies confirm that reforms are more sustainable when governments focus on protecting individuals directly through cash transfers or basic tariffs, rather than stabilizing prices broadly across markets.

In this context, Dr. Raed Skaff, Head of Spending Efficiency at KPMG Middle East, said: “Today, rationalizing subsidies represents one of the most powerful mechanisms for enhancing financial resilience, advancing social justice, and supporting the achievement of climate goals, but it is still underutilized. The debate has moved from questioning the feasibility of reform to how to design and implement it effectively. The Middle East region has advanced practical experience in this field, as our research shows that when governments improve the targeting of support, they make decisive decisions to increase spending efficiency and redirect trillions of dollars toward National priorities, they will be able to protect deserving groups and achieve a tangible and sustainable impact.”

The report draws on the experiences of advanced and emerging economies, including resource-rich countries, highlighting the role of subsidy reform in achieving broader national goals when designed in line with local economic structures and governance capabilities. In the Gulf Cooperation Council countries, transparent pricing mechanisms along with targeted social support programs played a pivotal role in consolidating acceptance of reform and enhancing the credibility of public policies.

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