The government is serious about tackling subsidies. This year it began to openly talk of the need to trim down the subsidy bill. Subsidies are expected to reach 25 per cent of the total government's budget in fiscal year 2010/11. The feeling is that the current subsidies system is both inefficient and filled with loopholes. These loopholes permit the rich to enjoy subsidies perhaps even more than the poor who actually need them. According to a study by Al-Ahram Center for Political and Strategic Studies, 20 per cent of Egyptian society's wealthiest receive 28 per cent of the total subsidies, while the poorest families receive 16 per cent. Moreover, the bulk of the state's budget for subsidies goes directly to subsidised energy products. LE67 billion out of LE115 billion were allocated to energy subsidies in the 2010-2011 budget, almost double the subsidies spent on education and health together. This being the case, the government announced it is considering the application of a new stricter system that better targets the poor. To start out the government is studying the allocation of cooking cylinders through coupons. Each family would be given a certain- yet undecided- number of coupons at which they may buy the cylinder at a subsidised price. should they need any extra cylinders they would buy them at market price. This plan aims to cut down on the misuse of cooking cylinders by businesses such as restaurants and brick furnaces. 26 million subsidised cylinders are distributed nationwide annually. Morever in July, a new energy pricing scheme for energy intensive and non-energy intensive industries was announced and applied. Natural gas for non-energy intensive industries which account for almost 97 per cent of the industrial sector is sold at $2 per million British thermal unit (Btu) up from $1.25 per million Btu. Energy intensive industries such as steel and cement continued to be charged $3 per million Btu but will bear a 50 per cent increase in electricity prices during peak hours. Industries outside both categories will be charged $2.3 per million Btu. The latest adjustments to natural gas prices to the industrial sector is part of a plan that was announced in 2007 which aims at eliminating energy subsidies for the industrial sector over a three-year period. Another scheme is to give licences to new industrial projects, including those falling within the intensive energy category, provided that they will supply their own energy. As for food subsidies, moving into a cash system is among the options the government is considering. Such a system would provide cash to the poor, who would in turn buy their goods at market prices. Consumers have adamantly opposed the cash system, saying that whatever amount they receive will not suffice as prices increase. According to a survey conducted by the Cabinet Information Center, 64 per cent of participants refused to accept a cash system, expressing their preference to hold on to the current ration cards system, which provides essential food commodities to 63 million people . Another bid the government is making in an attempt to reduce the total subsidies bill involves setting new criteria for the ration cards system, in order to try and decrease the number of beneficiaries. So far, the issue remains unresolved. The fact remains that 20 per cent of Egypt's population scrapes a living below the poverty line, according to official figures. Some observers have said that fighting poverty would be the real solution to reduce the high subsidies bill.
