Central Bank demands restructuring of energy subsidies

The deputy governor of the Central Bank of Egypt has called for the restructuring of energy subsidies, which are a LE100 million annual burden on the state budget.

In a meeting with the Shura Council’s economic and financial committee on Monday, Governor Nedal al-Qassem said restoring security would attract foreign investments and hence provide essential resources to plug the budget deficit.

The Cabinet also demanded that Parliament clarify its stance on reducing petroleum subsidies in the 2012-13 state budget, Al-Masry Al-Youm has learned. Should the subsidies remain as is, the budget is expected to exceed LE130 billion. The final decision will be left to the next president.

A source at the Petroleum Ministry close to the issue said there are several choices for its resolution. He said the current subsidy policy could be reduced, or a coupon-system of distributing goods could be introduced.

Petroleum Minister Abdullah Ghorab said the Cabinet discussed different methods of reducing the subsidy allotment last week, seeking to find a new arrangement that could increase funding for education, health and social justice.

Ghorab added that the head of the General Petroleum Authority had submitted two proposals to the Cabinet on methods of reducing subsidies. He said Parliament and the new president would have the final say on the issue.

General Petroleum Authority head Hany Dahy said detailed surveys have been conducted over how to reduce subsidies by 50 percent in three years. However, he said, this would require a public referendum before being approved.