Finance minister: Subsidies are Egypt's greatest enemy

Subsidies are Egypt's greatest enemy in the transitional period, Finance Minister Hazem al-Beblawy has said, claiming that the government is working on abolishing certain subsidies.

The government intends to abolish subsidies that will not negatively affect consumers, particularly the energy subsidy for factories, Beblawy told Al-Masry Al-Youm on the sidelines of his visit to Washington, DC on Friday.

Beblawy added that the energy subsidies boost the revenues of entrepreneurs rather than benefit consumers. Careful planning is required to reform the subsidy system, he noted.

Describing the subsidy system as “a major mistake,” Beblawy explained that 33 percent of the current government budget is devoted to subsidies and 22 percent is used to pay off interest on past debt.

Therefore, more than half of the budget goes to areas that do not benefit the state, he said.

On Friday, Beblawy met with members from the US Chamber of Commerce in the American capital. In his speech, Beblawy said Egypt is committed to a market economy and bolstering the private sector, which will then create jobs.

Energy experts have welcomed Egyptian government calls to abolish the energy subsidy, saying it will curb a budget deficit that this year reached LE134 billion.