CAIRO: Egypt's Federation of Egyptian Industries has said that subsidies in the country should be reduced and cut completely within 7 years. The federation said the country needs to switch completely from fossil fuels to natural gas in order to boost the cost-effectiveness of the country's stumbling economy. The announcement is not likely to go over well with a vast majority of the population that relies heavily on subsidized goods, including petrol and other energy subsidies. Gas stations in the country continue to see long lines, but according to a World Bank official, speaking on condition of anonymity, “this is the only way forward for Egypt to enter the global economy. “Subsidies are not good for investor confidence and while it cannot be done at once, reducing piece by piece would be a solid move for the country,” the official said. In the statement,the FEI said that “Egypt's long standing no limit energy subsidy policy has led to widespread misuse of the country's resources with low prices encouraging wastefulness.” The announcement continued to recommend the “gradual removal of energy subsidies over the next 5 to 7 years. FEI's findings follow a recent decision by Egypt's interim government to cut by a third energy subsidies provided to heavy industry.” While tentatively announced in early January, this is the first formal declaration from the Egyptian government that it is seriously looking at reducing subsidies. The Central Agency for Public Mobilization and Statistics (CAPMAS) says energy subsidies amount to some 100 billion Egyptian pounds and “represent about 20 percent of total government spending.” In comments published on Thursday, Egypt's Finance Minister Momtaz el-Said said that “the higher rates will be applied to steel, cement and ceramics industries,” allaying fears that all subsidies, including those for foodstuffs, would be cut. BM ShortURL: http://goo.gl/8hDFh Tags: Economy, featured, FEI, Industry, Subsidies Section: Business, Egypt, Latest News
