Although state subsidies represent a pillar of Egypt’s economic policy, they must be reformed, while commodity subsidies must not be allowed to undermine the government's achievements in terms of economic reform, Finance Minister Youssef Boutros-Ghali said this week.
Boutros-Ghali, who heads the Ministerial Economic Committee in charge of overseeing the design and implementation of Egypt's economic reform plan, went on to say that the government was facing "difficulties" regarding food and fuel subsidies. "But we must nevertheless continue taking steps towards reform," he said.
The minister added that the national economy was facing both medium- and long-term challenges. He stressed that the government must maintain equalibrium between the excess costs associated with food and fuel subsidies and Egypt's growing budget deficit, which now stands at 8.4 percent of the country's gross domestic product.
Joseph Stiglitz, an internationally renowned economist and winner of the 2001 Nobel Prize for economics, said that, contrary to the belief that income redistribution benefits all income classes, it nevertheless requires much effort. He went on to say that the Egyptian government needed to find an effective way to help the roughly 40 percent of Egyptian citizens that now live on less than US$2 per day.
Translated from the Arabic Edition.