Amun-Mes named as owner of Luxor's Kampp 23 tomb after 50-year mystery    Egypt vaccinates over 4.5m birds as part of nationwide poultry disease control drive    Egypt pushes for deeper UAE investment ties as CEPA talks underway    Egypt's New Alamein named Arab summer capital for 2025    Egypt launches lanes at Cairo Airport for African Union citizens    Egypt's Sisi, UK's Starmer discuss Gaza ceasefire, reconstruction    Egypt's Abdel-Aty urges EU to ease market access for agricultural goods    Egypt, Zambia launch pharma cooperation deal    Egypt's FM backs Ghana's W. Africa role    Egypt, Gavi explore vaccine manufacturing expansion in Geneva    China's Xinxing invests $150m in ductile iron pipe plant in Egypt    Israel escalates military campaign in Gaza amid deepening humanitarian catastrophe    GAFI, Invest Hong Kong discuss vision for Egypt as regional financial, business hub    Hisham Talaat Moustafa eyes Oman as promising real estate, tourism investment hub    Egypt's Foreign Minister stresses peace, security, economic ties at EU-AU Meeting    Egypt, Italy's GKSD explore healthcare investment, medical education partnership    Pakistan leaders condemn deadly Balochistan school bus attack, accuse India of backing terrorists    Egyptian PM orders action plan for Abu Qir's submerged antiquities to boost tourism    Egypt considers underwater museum to boost tourism revenue    Egypt's Culture Minister attends Pope Leo XIV's inauguration    Egypt wins Best Pavilion Design Award at Cannes Film Festival    Spain participates in EU Film Festival in Alexandria with Acclaimed screenings    Egypt's Health Minister urges unified 'One Health' strategy on World Veterinary Day    Flowers as a Form of Communication: Why It Still Matters to Give the Living    Egypt's Democratic Generation Party Evaluates 84 Candidates Ahead of Parliamentary Vote    On Sport to broadcast Pan Arab Golf Championship for Juniors and Ladies in Egypt    Golf Festival in Cairo to mark Arab Golf Federation's 50th anniversary    Germany among EU's priciest labour markets – official data    Cabinet approves establishment of national medical tourism council to boost healthcare sector    Sudan conflict, bilateral ties dominate talks between Al-Sisi, Al-Burhan in Cairo    Cairo's Madinaty and Katameya Dunes Golf Courses set to host 2025 Pan Arab Golf Championship from May 7-10    Egypt's PM follows up on Julius Nyerere dam project in Tanzania    Egypt's FM inspects Julius Nyerere Dam project in Tanzania    Egypt's FM praises ties with Tanzania    Paris Olympic gold '24 medals hit record value    A minute of silence for Egyptian sports    Russia says it's in sync with US, China, Pakistan on Taliban    It's a bit frustrating to draw at home: Real Madrid keeper after Villarreal game    Shoukry reviews with Guterres Egypt's efforts to achieve SDGs, promote human rights    Sudan says countries must cooperate on vaccines    Johnson & Johnson: Second shot boosts antibodies and protection against COVID-19    Egypt to tax bloggers, YouTubers    Egypt's FM asserts importance of stability in Libya, holding elections as scheduled    We mustn't lose touch: Muller after Bayern win in Bundesliga    Egypt records 36 new deaths from Covid-19, highest since mid June    Egypt sells $3 bln US-dollar dominated eurobonds    Gamal Hanafy's ceramic exhibition at Gezira Arts Centre is a must go    Italian Institute Director Davide Scalmani presents activities of the Cairo Institute for ITALIANA.IT platform    







Thank you for reporting!
This image will be automatically disabled when it gets reported by several people.



Egypt expects to up energy subsidies, maintain food subsidies
Published in Daily News Egypt on 25 - 01 - 2011

CAIRO: Atef Malash, head of the finance ministry's state budget sector, announced that the ministry has ruled out requesting an additional LE 4.5-7 billion for fiscal year 2010/11 to meet food price increases, according to local news reports.
Al-Masry Al-Youm newspaper cited Malash as saying that the General Authority for Supply Commodities has sufficient funding and he sees no reason to require additional funds to be approved by parliament.
Last week, Trade Minister Rachid Mohamed Rachid told Reuters that Egypt may need the additional funds for the current fiscal year.
In its daily note, investment bank Beltone Financial said, “We had previously indicated that additional fiscal outlays as a result of a hike in global food prices are unlikely to have a significant impact on the overall budget deficit because of the relatively smaller share of food subsidies of total fiscal expenditure.
According to Beltone, food subsidies amount to around 4 percent of total spending, with wheat's share at 3 percent, compared to energy subsidies, which represents more than 15 percent of total government spending and around 65 percent of total subsidies.
The note added that the impact of “additional fiscal outlays is likely to be diluted by the more notable improvements occurring on the revenue side of the budget as a result of the ongoing enhancement in the administration, collection and automation of government receipts.”
According to Jennifer Bremer, chair of the Public Policy and Administration Department at the American University of Cairo, the Ministry of Finance should have agreed to Rachid's suggestion.
“They may as well increase the provisions for the subsidies now because food prices are expected to rise, not only due to rising oil prices but because of more consumption around the world and recent flooding in wheat sources like Pakistan and Australia,” said Bremer.
“Its good budgeting practices to put something on reserve,” she added.
Bremer, citing a recent UN Food and Agriculture Organization report, pointed out that world food prices had risen to 2008 levels in September 2010 and are expected to rise even further in the current period.
She said that more funds for food subsidies should be raised by reducing energy subsidy spending. But talk about reductions in government energy subsidies which has come up over the past year has evaporated on now only appear to be increasing as world oil prices rise.
Abdulla Ghorab, CEO of the Egyptian General Petroleum Corporation (EGPC), said that Egypt's energy subsidy is expected to reach LE 86.8 billion for fiscal 2011/12 following a meeting with Minister of Petroleum, Sameh Fahmy earlier this week, according to the state-run Al-Ahram daily.
Egypt's output of crude oil is set to rise to around 720,000 barrels/day in fiscal year 2010/11 compared to 686,700 barrels/day last year, attracting $2.5 billion in foreign investment.
Beltone said that the preliminary estimate of fiscal year 2011/12 energy subsidy is in line with their forecast of LE 89 billion.
According to Beltone, the government spent LE 63 billion on petroleum subsidies during fiscal year 2009/2010, 40 percent of which went to diesel and 22 percent to butane, and this figure is expected to rise to LE 67.7 billion by the end of the current fiscal year.
Bremer explained that the government is just raising the energy subsidy spending as fuel prices rise. “If Egypt is going to continue subsidizing this way, it is eventually going to become really expensive,” she said.
“It is true that the Ministry of Finance has done a good job bringing down the budget deficit, but the deficit remains large and ties up a lot of domestic saving in banks because financing the deficit requires borrowing from private banks, crowding out private sector credit,” she said.
This is one of the main problems slowing down the economy with bank's preferring low risk government bonds to high risk private sector funding, she added.
Bremer called for the phase out of the energy subsidies pointing out that the subsidies mainly target the richest portion of the population which have cars and use the most energy.
“It makes more sense to maintain transfers to public transport systems or better targeted food subsidies instead of the untargeted energy subsidies. From the economic perspective it doesn't make sense and it is very regressive but it is understandable from the political side,” she said.
Bremer said that this may be due to the fact that this is a presidential election year.


Clic here to read the story from its source.