A ruling party official warned against increasing subsidies for petroleum products because of the repercussions for the state budget deficit. Subsidies this fiscal year were 43 percent higher than the amounts originally allocated for this purpose.
The final state budget financial statement for this fiscal year showed that subsidies increased from an allocated LE33 billion to an actual LE59 billion.
Former Minister of Industry Ali el-Saidy called for alternative subsidy policies that charge those with higher incomes more for their energy consumption. He also suggested allocating ten percent of energy subsidies to the public transportation sector in order to reduce car usage, which would subsequently reduce consumption of petrol.
Finance Minister Youssef Boutros-Ghali estimated the deficit for the next financial year at LE106 billion, an increase of LE8 billion from this year. He also predicted that subsidies of petroleum products will reach LE68 billion.
Alia el-Mahdy, a professor of economics, said energy subsidies are determined by average global oil prices, which fluctuate with supply and demand. “That is why the government issues treasury bonds to generate funds for subsidies whenever prices go up,” she explained.
Translated from the Arabic Edition.
