CAIRO: Despite austerity measures, the cuts in the 2012-2013 budget won’t compromise the expenditures for low income citizens, but would cut subsidies for energy intensive factories, the minister of finance said Sunday.
“The ministry has taken measures to provide necessary liquidity from the reserves of the budget, however these reserves do not exceed 1 percent,” minister Mumtaz Al-Saeed said, according to a report by state official news portal.
Starting Sunday the state would implement a decision to cut down energy subsidies and increase prices for energy-intensive factories such as those which produce ceramics, steel, cement, or fertilizers, he added.
“Gas and electricity prices for energy-intensive factories will be increased by $1, which is 33 percent of the current price,” said Al-Saeed.
Magda Kandil, executive director of the Egyptian Center for Economic Studies, previously told Daily News Egypt that such a move would not only help alleviate Egypt’s depleting resources, but at the same time it would force energy-intensive factories to think twice about their gas and electricity consumption.
She explained that the main goal would also be to curb government spending as the budget deficit continues to widen.
This move is among many steps that the government needs to take to cut spending. Cutting food subsidies or other expenses directed towards achieving social justice is out of the question at the moment. Kandil said the government is taking cautionary measures in light of recent protests and strikes, where frustrated, dissatisfied citizens continued to call for social justice.
Last week, the Central Bank governor announced that the current budget deficit, which was at LE 134 billion, is expected to reach LE 182 billion.
The state has been battling an ailing economy while trying to balance demands for social justice as unemployment rises and over 40 percent of Egyptians continue to live under the poverty line of $2 a day.
Prime Minister Kamal El-Ganzoury announced last week that the public sector would enforce a maximum wage that would be 35 times the minimum wage, starting this month.
The government is also in the process of cutting wages for state employees at the executive level in an attempt to curb government spending. While minimum wage is currently set at LE 700, including bonuses and meal stipends, many Egyptians argue it is still not enough at a time when global food and fuel prices are on the rise.
In an effort to create jobs, the General Authority for Investment and Free Zones (GAFI) announced on Sunday that 164 new companies were established during the last week of December.
In a statement released Saturday, GAFI announced that 28 industrial companies were established, in addition to six in tourism, 68 in the service sector, six in telecom, five in the field of construction, and 49 multi-activity companies.
The new companies are expected to create 1,810 new jobs, 1,782 of which for Egyptians. Some 685 jobs would be in the field of management, 74 in agriculture, 178 in engineering, 41 in the medical field, 93 in tourism, as well as 711 in tourism craftmaking, GAFI said.