Egypt's presidential frontrunner Sisi cautious on energy subsidies

Reuters News
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Posted: May 06, 2014 4:57 PM

CAIRO (Reuters) - Former Egyptian army chief Abdel Fattah al-Sisi, who is expected to win a presidential election this month, said in a television interview broadcast on Tuesday that costly energy subsidies could not be lifted quickly.

"The subsidies can't be removed suddenly ... People will not tolerate that," Sisi told CBC and ONTV.

Heavy spending on energy subsidies has taken a toll on the economy. But raising energy prices could trigger protests.

After the 2011 uprising that toppled Hosni Mubarak, already high energy subsidy costs ballooned to a fifth of state spending as the Egyptian pound plunged and due to an expanding population.

Egypt's finance minister said last month that spending on energy subsidies next year will be 10-12 percent above the 130 billion Egyptian pounds ($18.6 billion) budgeted for in the current fiscal year, unless immediate reforms are made.

The government of Mohamed Mursi, which was toppled last July, worked out an agreement with the International Monetary Fund that would have included austerity measures, higher taxes and a reduction in subsidies. It was never implemented.

Last year's energy subsidy bill was more than 120 billion Egyptian pounds, up from 115 billion the previous year.

(Reporting by Asma Alsharif; Writing by Michael Georgy; Editing by Janet Lawrence)