The cabinet is examining petroleum subsidies, and will submit a subsidy plan for the coming year’s budget to the People's Assembly, the petroleum minister said Saturday.
Discussion the budget the fiscal year 2012/2013 is scheduled for April.
Minister of Petroleum Abdallah Ghorab told Al-Masry Al-Youm that the cabinet will present all the items related to petroleum and energy subsidies to the People's Assembly. The ministry will then announce the final decisions after discussing the issue with MPs, he said.
Ghorab said that the cabinet will also submit detailed reports to the Parliament on the public spending items of the budget, expected to reach LE120 billion in the coming year, an increase of 25 percent over the LE95.6 billion budget in 2011/2012.
A year of political and economic turmoil has pushed up unemployment in Egypt, widened its budget and balance of payments deficits, and drained its foreign reserves. Revenues from tourism and foreign investment, two of the country’s main sources of foreign exchange, declined sharply.
The currency has fallen by less than 4 percent, to 6.04 against the dollar.
In January, Egypt formally asked the International Monetary Fund for a $3.2 billion loan, saying it wanted the money as soon as possible and hoped an agreement would be signed within weeks. Egypt sent the fund its economic plan for approval, which is likely to involve less government spending. The fund typically does not approve of large subsidies, taking a free market approach.
Ghorab said petroleum subsidies make up 72 percent of all government subsidies, with petroleum products being subsidized at LE57 billion in the first half of the current fiscal year alone. These large expenditures on petroleum subsidies, he said, negatively affects funding of education, health and other services.
"We are in crucial need to study the issue of subsidies, to support those who deserve support,” Ghorab said. “This should be discussed by People's Assembly and the cabinet of the revolution.”
The minister said the cost of subsidizing petroleum reached nearly half a trillion dollars in the last five years.
