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Worries abound in Egypt as energy subsidy cuts emerge
Published in The Saudi Gazette on 25 - 09 - 2012

CAIRO – The government of Egypt plans to cut energy subsidies by $4.2 billion in an effort to boost their spending power, Arabic daily Al-Masry Al-Youm reported Monday, citing an unnamed official. The source said the government has already drafted a plan to reduce energy subsidies in the country.
The report said Prime Minister Hisham Qandil submitted the proposal to President Mohamed Morsi and the government is debating whether to implement the cuts next month or to wait until after parliamentary elections.
It comes as Cairo continues to hope for a $4.8 billion loan from the International Monetary Fund (IMF) as the country's economic woes continue.
Before the loan can be approved, however, the IMF is pushing the Egyptian government to make “tangible” steps in the negotiation process and cut subsidies, the official added.
The announcement is not likely to go over well with a vast majority of the population that relies heavily on subsidized goods, including petrol and other energy subsidies.
Gas stations in the country continue to see long lines, but according to a World Bank official, speaking on condition of anonymity, “this is the only way forward for Egypt to enter the global economy.
“Subsidies are not good for investor confidence and while it cannot be done at once, reducing piece by piece would be a solid move for the country,” the official said.
The Central Agency for Public Mobilization and Statistics (CAPMAS) says energy subsidies amount to some 100 billion Egyptian pounds and “represent about 20 percent of total government spending.”
For low-income Egyptians, the ending of subsidies could mean massive economic hardship.
Amr Mohsen, a local supermarket owner Cairo said that if the government cuts energy subsidies, his profits would dwindle and he might not be able to survive.
“I have a nice shop and it is doing all right. But with the rising of food costs in the country, times have been tough,” he told Bikyamasr.com. “If the government ends energy subsidies for fuel and electricity, my bills will get even higher and I don't know if I can manage that really and still have enough to provide for my family.”
His fears are being heard across the country, especially among those who have not seen their earnings or salaries increase in the recent past.
Many argue that if the subsidies go there will be massive unrest because, as Mohsen argued, “people won't be able to survive and deliver for their families and children. We need better earning before subsidies are cut. We are people too.”
In recent years, the subsidies in the country have come under increased pressure as the wealthy continued to take subsidies and put it on the market without it reaching the impoverished segments of society. – SG/Agencies


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