Egypt mulls reducing energy subsidies

Egypt is currently studying the possibility of reducing energy subsidies to the industrial sector, Trade and Industry Minister Mahmoud Eisa said in a statement.

The move would reduce subsidies to energy-intensive factories as the ministerial committee of energy is currently looking for alternatives to reach a “consensual resolution to ensure the safety of the resources of the state budget.”

The decision is also meant to reduce the state’s deficit while ensuring that resources are properly allocated to the right sectors.

According to Egypt’s finance minister, the country’s deficit could hit LE 185 billion the next fiscal year.

There would be an emphasis from the Egyptian government not to damage the interests of the producers and not to make them suffer any additional burden that may affect their competitiveness both in the local and foreign market, Eisa pointed out.

As the country is seeing a shortage in fossil fuels, Magda Kandil, executive director of the Egyptian Center of Economic Studies previously told Daily News Egypt, it would be a smart move if the government reduced energy subsidies for consumers in order to encourage citizens to save energy and electricity.

“By not raising electricity prices, we are actually encouraging people to use more energy and electricity,” she said. “If it’s increased, people will rethink their usage and be more aware of their resources.”

Kandil also pointed out that since the government is not increasing prices internally and there is a surge in fuel prices, they would have to resort to other means.

“The electricity and energy issue is an eternal problem, now the prices are increasing, so this means now the government is borrowing more to cover these costs, if they aren’t increasing prices,” she said.

In a post revolution economy, the country’s still continues to suffer with a decline in tourism and little foreign direct investments.