Reduction of Subsidy and Egypt’s Financial Situation

Source: Egyptian Institute for Studies

Author(s): Abdelhafez Alsawy

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Subsidy in Egypt, a thorny issue, is usually addressed in light of government decisions to reduce it, which accordingly leads to raising the prices of goods and services. But subsidy is not new in many economies, even those of developed countries. Because subsidy addresses certain social circumstances, it is not wise to eliminate it completely on the pretext that some of the rich benefit from it.

For example, the United States and the European Union continue to support the agricultural sector there, despite their pledge to phase it out when the World Trade Organization was established in January 1995. But this has not happened in more than two decades, arguing that the abolition of subsidies will have a negative social impact on farmers and workers in the agricultural sector.

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