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Unravelling an irksome riddle
Published in The Egyptian Gazette on 02 - 03 - 2010

Subsidies have been irking to the Government of this country as well as annoying to several local economic experts and analysts. The system that has been in place since World War II continued to make news headlines both in the past and at present.
The fact that the Government has on numerous occasions admitted that it is not able to handle the subsidy system as it should, inspires many of the nation's experts into thinking.
"Everybody knows that subsidies don't reach the needy," said Maged Ali, an economic analyst. "This means that we should seek alternative systems for our system, which is more than 70 years old," he told the Mail in an interview.
Ali and like-minded Egyptian thinkers say for the Government to be able to deliver subsidies to the needy, it should end the subsidy-in-kind system and start a new system of financial aid.
They say the Government should give limited-income Egyptians coupons with which they can get certain amounts of money to assist them with their lives.
The detractors of this idea, however, cite the inability to determine who should take these coupons and who should not take them as a stumbling block on the way.
They say it is not easy in a county where the poor can be found every where and corruption has become part and parcel of the culture of the people to locate those who deserve the subsidies.
But this does not seem to be a big issue for people like Samir Radwan, a leading economic expert.
Radwan says the Government can easily know the families that deserve to receive subsidies and the ones that do not deserve them by looking at the electricity consumption of each family.
"By doing this, the government can easily know who should receive any subsidies," Radwan said. "It isn't a puzzle in fact," he added.
If things were that easy, the Government might have solved the problem a long time ago.
But official statements cite the suffering the executives of the government have while trying to deliver subsidies to low-income Egyptians.
A few days ago, Minister of Social Solidarity Ali Muselhy expressed disappointment at the inability of his staff to monitor the markets in a way that ensured that the subsidies went straight to the poor.
Muselhy said his 11,000 inspectors had to supervise the work of 23,000 bakeries that sell subsidised bread, 26,000 supermarkets, and 3,000 butane cylinder depots.
"This shows that we need to change the current subsidy system," the official said.
The Government pays 10 billion Egyptian pounds (US$ 1.8 billion) to subsidise butane gas cylinders. Government bakeries also produce 250 million bread loaves to cater for the needs of the 80 million citizens of this country.
But Government officials say around 20 per cent of the subsidies allocated to the bread (almost 2 billion Egyptian pounds or US$ 364.96 million) do not go to the needy.
Ali, the economic analyst, says the billions of pounds that do not go to those who deserve them threaten the whole subsidy system and make it necessary for the Government to quickly seek ways to address the problem.
"More than 90 per cent of the people of this country are poor," he said. "Although they don't get their rightful share of the subsidies, these people can't live without them," he added.
Radwan, however, hopes to see an end to the subsidy system altogether. He says the system cannot keep going on and on with no end.
"This subsidy system must come to an end," he said. "But for this to happen, Egyptians must get sufficient salaries," he added.
He might have forgotten that millions in this country's workforce are unable to find jobs in the first place. These people do not get any salaries whatsoever.


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