Egypt plans to raise electricity costs for its richest 20 percent of the population before the nation votes in its general elections at the end of May, since the “country has no time to waste” in rolling out reforms, according to its planning minister.
However, Ashraf-al-Arabi, the minister of planning and international cooperation refused to provide further details as he revealed that plans to hike gasoline prices will be announced “very soon”.
Egypt’s speed with which it is moving indicates that it is now following International Monetary Fund’s advice to lower expensive subsidies, among other structural reforms.
The costly energy subsidies surged to a fifth of the nation’s budget after the riots that ousted former President Hosni Mubarak after the Egyptian pound tumbled, raising the cost of imports.
Egypt’s finance minister revealed in March energy subsidies will cost 10-12 percent more than 130 billion Egyptian pounds that are set aside in the next fiscal year, unless urgent measures are taken.
“This energy subsidy system is unsustainable; we cannot afford (for) this to continue,” al-Arabi said was quoted during the IMF-World Bank meetings in Washington, reported Reuters.
“We don’t have time to waste. … It’s better for Egypt to start some of these measures at least before the presidential election, just to pave the way for the coming president, to make his life easier,” he added.
However, when asked how much the electricity costs will rise, Al-Arabi refused to comment saying that the matter is still being discussed. He however said that the increases will be done in phases and take 3-5 years to roll out fully.
He also added that the government will set aside 15 percent of savings made from trimming subsidies to social welfare programs aimed at the poor. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
To contact the reporter of this story; Jonathan Millet at email@example.com