CAIRO: The Egyptian government on Sunday announced that it would reduce subsidies for heavy industry by 33 percent in an effort to close the gap in the country's growing budget deficit, the state-run al-Ahram newspaper reported. The result will see natural gas and electricity prices for the sector increase dramatically by the end of the month, officials were quoted as saying. The new rates will be applied to steel, cement and ceramics industries and the government hopes the move will cut some 20 billion Egyptian pounds off the country's deficit. Since the January 2011 uprising that led to the ousting of former President Hosni Mubarak on February 11, the country's economy has faced a massive downturn. Now the government is looking at ways to finance itself amidst a rising deficit and interest rates on debt rise to over 14 percent. Al-Ahram quoted the central bank governor last week as saying the deficit for the fiscal year that began on July 1 could be as high as 182 billion Egyptian pounds compared to 134 billion pounds the government had forecast in June. This would work out to about 11 percent of gross domestic product. Economists say cutting energy subsidies, which represent about 20 of total spending, is one of the few practical options the country has to cut the deficit. Saeed was quoted as saying the government would try not to hurt lower income groups, Reuters news agency reported. “The government will take care that the increases do not affect domestic fertiliser prices,” he was quoted as saying, adding that subsidies on gasoline and other petroleum products would remain untouched, and no new taxes would be introduced. BM ShortURL: http://goo.gl/hKQeY Tags: deficit, Economy, featured, Industry, Subsidies Section: Business, Egypt, Latest News
