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REFORMS DELAY

Egypt gas subsidy coupons by year-end

Cairo, October 12, 2012

 

Egypt will only launch a scheme to cut the fuel subsidy bill that is a quarter of its budget towards the end of this year, a cabinet minister said, later than had previously been suggested.
 
Local Development Minister Ahmed Zaki Abdeen said the government had started printing the coupons for subsidised gas with which it hopes to better target the subsidies to people who need them ahead of the introduction of smart cards.
 
The government had previously targeted mid-October for the introduction of the coupons, the first stage in a broader reform of energy subsidies. The minister said the coupons would be ready for the start of the winter season; he did not give a precise date but Egypt's winter generally begins in December.
 
Plans for such a system have long been mooted, even before the uprising that toppled President Hosni Mubarak.
 
But the pressure to direct subsidies more effectively and so help cut subsidy costs has become more pressing since then because the budget deficit has ballooned to 11 percent of gross domestic product.
 
"The government has printed coupons to distribute butagas. These coupons will be distributed to those who need subsidised (butagas) until the implementation of the smart card system. The smart card system is better," the minister told reporters.
 
The minister said he expected the coupon system to be implemented before winter began.
 
As it works on economic plans, Egypt is seeking to shore up its finances by negotiating a $4.8 billion loan with the International Monetary Fund and securing support or pledges of aid from Gulf states, Turkey and Western countries.
 
An IMF deal would reassure investors who want the Washington-based institute's seal of approval on the government's programme to revive the economy.
 
One part of the programme is likely to be a restructuring of subsidies on petroleum and other energy products.
 
But analysts say measures to reduce energy subsidies are certain to be unpopular among many Egyptians, some of whom joined the uprising last year because of economic grievances. - Reuters



Tags: Egypt | subsidy | Delay |

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