MPs need clear mechanism for switching to monetary subsidies

CAIRO – 20 August 2017: Among the economic reform measures assumed by the state, switching from in-kind subsidies to monetary subsidies is in progress. However, many parliament members (MPs,) and the speaker Ali Abdel Aal, point to the absence of a clear mechanism for that transition.

MP Tarek Radwan told press that setting a database of deserving recipients is the most important step to come up with a mechanism.

MP Amin Masoud told Egypt Today that it is impossible that 70 million citizens (out of almost 100 million) are eligible for subsidies, emphasizing that dual pricing of goods causes market manipulation and subsidies’ theft, which harms citizens in the end.
Masoud said on Sunday that he had conducted a study dividing citizens on different income levels in order to set the amount of monetary subsidies corresponding to families’ different income levels.

The MP revealed that the state would save LE 100 billion ($5.63 billion) annually when switching to monetary subsidies, since those who deserve it are 50 million, so only LE 50 billion would be spent on subsidies. The saved money would reduce the budget deficit and achieve economic growth.

As a measure to reinforce the social safety network, MP Hesham Emara, who is a member of the economic committee at the parliament, told the press that the government has to set prices for strategic goods and not leave them to supply and demand forces to prevent traders’ manipulation.

Monetary subsidies are delivered to benefit poor families enrolled on a recent program adopted by the Ministry of Cooperation called Takafol wa karama (Solidarity and Dignity) launched two years ago.

Takafol wa Karama program is funded by more than LE 10 million from the state’s budget in the fiscal year 2017/2018.

The Ministry is helping the children of these families find job opportunities matching their qualifications through a program called Forsa (Opportunity). That is in addition to expansion in micro financing of projects.