CAIRO: A report published by the World Bank earlier this month said that nearly half of all subsidies in Egypt goes to the richest 60 percent, even though the use of subsidies could provide better living circumstances for at least 63 percent of the country's poor. Bernard Funck, the World Bank representative for Social and Economic Development in the Middle East and North Africa, said in comments to reporters that the study also showed a need for Cairo to look into reducing the overall use of the subsidy program, noting that “there is a great loss of resources directed to subsidies and that the country can achieve the same goal with fewer resources.” Funck said during the discussion of the recent report by the World Bank entitled “Food subsidies in Egypt between the utility and leakage” at the Faculty of Political Science and Economics of Cairo University that the study of “reduction of subsidies and rationalization does not target Egypt alone,” as the Iraqi government asked him to also study this subject and its application there. He also said Tunisia requested a similar study to be undertaken in their country, but after seeing how Egypt would apply the results. He added that the World Bank prepared a paper on the reduction of fuel subsidies and rationalize their consumption of energy and will be shortly submitted to the Egyptian government, as well as a report to study the production of local bread and has put forward policy options to reduce the production in some Bakeries. “If Egypt is to truly enter the international economy and create a market that is on par with the rest of the world, fuel subsidies need to go,” said on economist at the International Finance Corporation (IFC). The official, who was not authorized to speak with the media, said that “the reduction of fuel subsidies would create a better environment and reduce the amount of vehicles polluting Egypt's roads.” According to the report presented by Shirin Al-Shawarbi, a researcher in the field of poverty reduction at the World Bank, “45 percent of total subsidies goes to the richest 60 percent in Egypt,” pointing out that it can “provide subsidies by 63 percent for the poor.” The report stated that the cost of support amounted in accordance with the fiscal year 2008/2009 was at some 5.5 billion Egyptian pounds ($1 billion), where wheat represents the largest percentage at 61 percent, followed by oil at 18 percent. The report pointed out that Upper Egypt gets the least benefit from the subsidies followed by Delta Governorates, pointing out Cairo takes advantage fully of its position in acquiring the bulk of all subsidies, and noted that the “rich get the bulk of subsidies more than the poor.” BM
