Egyptian President Abdel Fattah el-Sisi has announced that the subsidies that brought down the price of fuel in Egypt would be reduced, raising the price of fuel for consumers across the country. The prices of several different kinds of fuel were affected, including high-octane gas for expensive cars and diesel fuel for powering public buses and farmers’ irrigation pumps. Some of the increases reached 78 percent. Surprisingly, the announcement was not met with widespread civil unrest.
Mr. Sisi used emotional appeals to convince the public that the cuts to the subsidies were necessary. The Egyptian president was trying to avoid a repeat of 1977. That year, then President Anwar el-Sadat announced his intentions to increase the prices of many subsidized goods, including flour and rice. The announcement sparked days of riots that resulted in millions of dollars in damage and more than 70 people dead. To quell resistance, the government has made protesting illegal and has dispersed some protesters using deadly force.
The reduction in subsidies is one of President el-Sisi’s first major policy initiatives. More than 26 percent of the annual national budget goes towards providing subsidies for energy and food, including sugar, flour and tea. Energy subsidies are the most expensive single part of the government’s subsidy system. However, fixing the subsidy program in a country where half the population lives around or below the poverty line will be no easy task. Many Egyptians doubt the ability of the government to solve the country’s economic problems.
Many Egyptians admit that they already knew that the fuel prices, which were among the lowest in the world, could not stay that way. The Egyptian economy has been virtually destroyed by years of political turmoil. Many of the subsidies were benefiting companies more than they benefited the poor citizens that they were intended to help and were unsustainable in the current economy.