17 April 2013

Egypt: IMF Official Urges Nation to Abolish Energy Subsidies

Photo: Trevor Ballantyne/AllAfrica
The pyramids of Giza seen from a taxi in Cairo, Egypt (file photo).

Egypt is among Middle Eastern countries in need of a pressing financial adaptation, an International Monetary Fund (IMF) official said on Wednesday.

Egypt is also one of the countries that were harmed by the upsurge in oil prices, Carlo Cottarelli, Director of the IMF's Fiscal Affairs Department, said.

Cottarelli urged Egypt to gradually abolish the energy subsidies it provides to its people.

Abolishing energy subsidies will lead to a hike in prices but the important thing is compensating those who cannot afford those prices, the state news agency MENA reported Cottarelli as saying.

During a press briefing in Washington, Cottarelli emphasised the need for abolishing energy subsidies and compensating the poor in cash.

Cottarelli suggested replacing subsidies with a system of financial transfers or cash allowances.

Egypt seeks to obtain a $4.8 billion loan from the IMF to boost its struggling economy which has been in decline since former president Hosni Mubarak was toppled in a 2011 popular uprising.

An IMF delegation that had been to Cairo earlier has left without reaching an agreement on the loan with Egypt yet presidential spokesman Amr Amer said that negotiations between both parties did not fail.

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