how much of the egyptian budget goes toward subsidies? (course hero)

What is the need for energy subsidy reform in Egypt?

The need for energy subsidy reform is one of the few topics in Egypt that economists on both ends of the political spectrum can agree upon, especially given that domestic consumption has outpaced oil production and that prospects of new discoveries remain limited. Those on the left and the right also generally agree on how to reform the system. International organizations such as the World Bank and the IMF have already provided the major features of the recipe for this reform, and almost all of Egypt’s recent governments have been convinced of its necessity.

What happened to Egypt's economy since 2011?

Since Egypt’s 2011 revolution, the country’s economy has been suffering, with almost all economic indicators pointing to a deteriorating situation— and this despite the unprecedented support of some of the Arab Gulf countries. Subsidies, which have always represented the social contract between the governing regime and the population, ...

What are the remedies for the current in kind subsidy system?

Proposed remedies include replacing the current in kind subsidy system with cash subsidies for food and energy; raising the price of energy for the energy-intensive industries that benefit more from the system; and rationing the usage of gasoline, natural gas, and diesel. The government is beginning to take some action.

What are the problems of Egypt?

Inefficient subsidy systems, along with unemployment, comprise the two major structural economic problems facing Egypt. The economic cost of subsidies in a country experiencing a huge loss of reserves, a severe scarcity of foreign currency (albeit mitigated by Gulf aid), an alarming budget deficit (almost 14 percent of GDP, as energy and food subsidies’ share of GDP has reached almost 10 percent), and an exploding public debt (exceeding 100 percent of GDP) demonstrates that the system cannot be sustained. The costs have reached alarming figures. Energy subsidies comprised 72 percent of the total subsidy allocation in the 2011-2012 government budget, whereas food subsidies accounted for 14 percent. Fuel subsidies alone represented more than 70 percent of the budget deficit in 2011-2012.

What percentage of the Egyptian population is below the poverty level?

"Forty-five percent of the Egyptian population is below the poverty level of earning $2 per day.

What industries benefit from natural gas subsidies?

For example, energy-intensive industries such as steel and cement often benefit from the natural gas subsidy. By receiving the subsidy and then selling their products domestically at prices equivalent to those on the international market, these companies enjoy a substantial profit.

What percentage of the population benefits from energy subsidies?

A commonly cited figure is the 20/80 percent argument, which states that 80 percent of the population benefits from 20 percent of the energy subsidies, whereas only 20 percent of the population benefits from 80 percent of the subsidies. For example, energy-intensive industries such as steel and cement often benefit from the natural gas subsidy.