The Impact of Fossil Fuel Subsidies on Global Warming Externalities in Afghanistan: Evidence from IMF Data (2015–2025)

Abstrak

This exploratory study examines the association between fossil fuel subsidies and global warming externalities in Afghanistan from 2015 to 2025. Afghanistan provides a policy-relevant case for investigating whether subsidy externality relationships can be meaningfully assessed where energy and environmental data are limited. Using 11 annual observations obtained from the International Monetary Fund (IMF), the study applies descriptive statistics, trend analysis, Pearson correlation, and ordinary least squares (OLS) regression, supplemented by Augmented Dickey–Fuller tests and a stationary-transformation regression. Fossil fuel subsidies fluctuated considerably, while estimated global warming externalities generally increased. Pearson correlation indicated a positive association (r = 0.6744, p = 0.0228), and the level OLS regression produced a statistically significant positive coefficient (β = 0.9725, p = 0.023). After accounting for non-stationarity, however, the coefficient remained positive but was not statistically significant at the 5% level (β = 0.2960, p = 0.089). This weaker result suggests that the association observed in levels may partly reflect shared temporal trends, reducing confidence in the principal finding. The study therefore provides suggestive, not robust, evidence of an association and does not establish causality. Its contribution lies in documenting Afghanistan-specific trends and demonstrating how non-stationarity and a small sample constrain the interpretation of IMF-based subsidy and externality indicators. The findings support improved energy and environmental data collection and further research to inform consideration of gradual subsidy reform, targeted energy support, and cleaner energy investment.