Isobel Coleman analyzes Egypt’s long list of subsidies, their impact on the economy and the reluctance of Egypt’s leaders to address the issue despite pressure from the IMF.
It's interesting to read today President Obama's plea to Congress to end the $4 billion tax subsidies to oil companies. As expected, his plea was ignored.
Excerpt from Coleman's article below:
During my recent visit, I found that Egyptians—both leaders and citizens—know that the country faces a moment of reckoning where subsidies have to be cut. Indeed, fears of a price hike are behind the fuel hoarding that has contributed to shortages. Lifting subsidies need not be too painful; as I noted in February, Iran reformed its fuel subsidies in 2010, offsetting the price hikes with cash transfers to families. The question is whether Egypt’s emerging political class can summon the courage necessary to make the tough choices instead of waiting for outside forces (such as the IMF or international currency markets) to bring the issue to a head. The still-ruling Supreme Council of the Armed Forces would do the country a favor by taking the first hard steps to reduce subsidies, rather than throwing the decision to the first post-Mubarak president, who will be elected soon. But don’t count on it.Image: A. Abdalla