Back to the complete issue
Sunday, 5 February 2017

More subsidy cuts coming soon as IMF delegation reviews reform agenda progress

More subsidy cuts coming soon as IMF delegation reviews Egypt’s progress on reform program: The Ismail government is preparing a series of new “austerity measures” which it plans to discuss with an International Monetary Fund delegation currently visiting to review progress on the reform program Egypt agreed as a condition of its USD 12 bn extended fund facility from the IMF, government sources tell Al Shorouk. The measures include further hikes in the prices of fuel, electricity, and subsidized food commodities. There are divisions within the government over when to implement these new increases, as many senior officials fear the social backlash, said the source. He added that while the delegation is “sympathetic” to the dilemmas of the government, they warned of the consequences of delaying implementing them. As we noted last week, the delegation’s report on the implementation is a requirement for unlocking the second installment of the USD 12 bn IMF funding.

While we’re on subsidies, Patrick Werr points to Egypt’s fertilizer industry as a clear case of how subsidies distort the market. In his column for The National, Werr notes that subsidising energy to fertilizer producers has not only led to farmers overusing them on crops, adding pollutants to the Nile and Mediterranean, but also resulted in shortages in the market as producing fertilizers and selling them at the prices set by the government became a money losing endeavour.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of HSBC Egypt (tax ID: 204-901-715), the leading corporate and retail lender in Egypt; EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; Moharram & Partners (tax ID: 616-112-459), the leading public policy and government affairs partner; Palm Hills Developments (tax ID: 432-737-014), a leading developer of commercial and residential properties; Mashreq (tax ID: 204-898-862), the MENA region’s leading homegrown personal and digital bank; and Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt.