CAIRO - The defects in the subsidy system exacerbate the miserable conditions of many Egyptians' lives. While better-off individuals also suffer from rising foodstuff prices and decreased salaries, the wealthy minority fully benefit from subsidies. During the last four decades, millions of poor Egyptians have depended on being able to buy different subsidised commodities at reasonable prices, especially foodstuffs. “The real problem is how to redefine who should be the rightful beneficiaries of the system. Knowing exactly who the 'deserving' individuals are would make the system more efficient. At present, rich people, as well as the poor, benefit from the subsidised items,” Alia el-Mahdi, a professor of economics at Cairo University, stated. Subsidies accounted for 25 per cent of total Government expenditure in the current fiscal year's budget. But Minister of Finance Samir Radwan has predicted this sum of LE126.6 million in the 2010-2011 budget will rise to LE177.5 billion in next year's budget. In addition to subsidised flour for producing baladi (pitta-like) bread, ration cards provide the Egyptians with a monthly quota of basic foodstuff including rice, sugar, cooking oil and tea for a maximum of four persons registered on each card. The total cost of food subsidies in the current fiscal year is LE13.5 billion. “The rich as well as the poor individuals benefit from the subsidised foodstuffs. Hence, personal financial subsidies are the best solution for people on low incomes,” advocated Abdel-Mottalib Abdel-Hamid, a professor of economics and the incumbent Chairman of the Sadat Academy for Management Sciences. “Efficient administration of the financial subsidises will guarantee effective and just distribution to those in need,” he added. The energy subsidies in the current fiscal year amount to LE67.6 billion, which is allocated to the Egyptian General Petroleum Corporation to keep prices of energy products below their international level prices for the domestic, business and government sectors. (This sum represents the difference between the price paid to the foreign partner and the price paid by consumers). Subsidised energy products include petrol (80- and 90- octane), kerosene, diesel, fuel oil and natural gas. El-Mahdi stated: “Egyptian households benefit from only 35 per cent of the energy subsidies. The industrial and governmental sectors consume 35 and 30 per cent respectively of the energy subsidies.” Accordingly, he added, “The Government has to prioritise Egyptian families, letting the industrial and governmental sectors meet their own expenditure”. Amina Helmi, researcher at the Egyptian Centre for Economic Studies, remarked. “The current highly costly system hasn't achieved social justice. The residents of rural areas and throughout Upper Egypt receive fewer subsidised items than their urban counterparts.” She pointed out: “In addition, the middlemen and distributors monopolise subsidised items. Each butane cylinder costs the government LE40, but should be sold to the public at LE2.5. But, in most cases, the distributors sell those cylinders at LE4.5 each, while the price might go as high as LE20 or more per cylinder. I call on the Government to issue a law punishing violators and monopolists.” Helmi also suggested that the Government “can subsidise the bread not the flour to control the market and extend the natural gas networks to solve the butane cylinder shortages”.
