Hostname: page-component-586b7cd67f-dsjbd Total loading time: 0 Render date: 2024-11-27T13:48:03.763Z Has data issue: false hasContentIssue false
  • English
  • Français

Subsidization Policies in Egypt: Neither Economic Growth nor Distribution

Published online by Cambridge University Press:  29 January 2009

Iliya Harik
Iliya Harik
Affiliation:
Iliya hank teaches political science at, the Indiana University, Bloomington, Ind. 47401, U.S.A.
Get access Rights & Permissions [Opens in a new window]

Abstract

Subsidies are a widespread economic practice in most developing countries and in centrally planned economies such as those of Eastern Europe. In the United States and Western Europe, they are generally associated with price support for producers, especially in agriculture. In the less-developed countries (LDCs), subsidies usually support consumers. When extended to producers, the benefit is passed on to consumers through official price controls. The question is whether such price support is the best means available to meet the basic needs strategy of development.

Subsidies in LDCs often begin as measures to help the poor, but they usually expand beyond the target population and constitute by and large a wage supplement for almost all salaried workers.

Type
Articles
Information
International Journal of Middle East Studies , Volume 24 , Issue 3 , August 1992 , pp. 481 - 499
Copyright
Copyright © Cambridge University Press 1992

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

NOTES

Author's note: I would like to thank the Social Science Research Council, Fulbright and Fulbright-Hays, and the American Research Center in Egypt for grants during 1987 and 1988 in support of the field research on which this article is based. None of these organizations is responsible for the contents of the article.

This article was written before Egypt signed the reform economic agreement with the IMF in 1991. The section marked addendum at the end of the substantive text will briefly cover the basic changes since 1988.

1 Subsidies in Egypt are higher than in any other Middle Eastern country including Syria and Tunisia.

2 For background information, see John, Waterbury, The Egypt of Nasser and Sadat (Princeton, N. J.: Princeton University Press, 1983);Google ScholarNazih, Ayubi, Bureaucracy in Contemporary Egypt (New York, 1980);Google ScholarRobert, Springborg, Mubarak's Egypt: Fragmentation of the Political Order (Boulder, Colo., 1989).Google Scholar Also Denis, J. Sullivan, “The Political Economy of Reform in Egypt,” International Journal of Middle East Studies, 22, 3 (08 1990);Google ScholarRobert, Springborg, “Agrarian Bourgeoisie, Semiproletariats and the Egyptian State: Lessons for Liberalization,” International Journal of Middle East Studies, 22, 4 (11 1990).Google Scholar

3 See ʿAbd, al Munʿim al-Qaysūnī, “Qaḍiyyat al-Daʿm fī Miṣr,” al-Ahrām, 6 09 1977.Google Scholar

4 Ibid.

5 World Bank, Agricultural Price Management in Egypt, Staff Working Paper no. 388 (Washington, D.C.: World Bank, 1980), iv.Google Scholar

6 Ibid., 16.

7 Ibid..

8 Al-Ahrām, 25 08 1988.Google Scholar

9 Government of Egypt, Ministry of Finance, al-Bayān al-Iḥṣāʾī ʿan Mashrūʿ al-Muwāzana al-ʿāmma li-al-Dawla, 1988/89 (Cairo, 1989), 24; in the previous year it was E £11,019.9 million.Google Scholar

10 Central Bank of Egypt, Annual Report, 1986/87 (in Arabic) (Cairo: Central Bank of Egypt, 1987).Google Scholar

11 See Bank Miṣr, al-Nashra al-Iqtiṣadiyya, year 29, no. 2 (Cairo: Bank Misr, 1985), 31–32.Google Scholar

12 See announcement in al-Ahrām, 9 10 1988.Google Scholar

13 Statement made by Dr. ʿAbd al-Razzaq Rizq Allah, Egyptian expert at the United Nations, see al-Ahrām, 20 08 1988. This assumes that inflation has been at 35 percent annually. Officially it is estimated at 18 percent. but observers put it at between 25 and 35 percent.Google Scholar

14 Figure based on data given in Central Bank of Egypt, Annual Report, 1986/1987, 14.Google Scholar

15 Ibid., 2.

16 Central Bank of Egypt, al-Majalla al-lqtiṣādiyya, 26, 2 (Cairo: Central Bank of Egypt, 1986), 150.Google Scholar

17 Minister of supplies in statement to the People's Assembly; see al-Ahrām, 4 03 1988. The figure for wheat and flour is a little higher than other official figures.Google Scholar

18 USAID, Report (Washington, D.C.: USAID, 1987), 6.Google Scholar

19 The data on which this comparison of the 1970s situation is based are drawn from the following sources: an unpublished study undertaken by USAID which describes the situation in 1979, Egypt's Food and Energy Subsidies in 1979 (Washington, D.C.: USAID, 1979) (henceforth USAID, 1979);Google Scholar the Egyptian Ministry of Supplies, Subsidy List Per Item (in Arabic) (Cairo: Egyptian Ministry of Supplies, 1986);Google ScholarUSAID, The Energy Problem (Washington, D. C.: USAID, 1986)Google Scholar (henceforth, USAID, EP, 1986).Google Scholar

20 Presidential address on the 34th anniversary of the July revolution; see text in al-Ahrām al-lqtiṣādī, 28 07 1986.Google Scholar The figure given for 1980–81 by Government of Egypt, CAPMAS, Statistical Yearbook, 1952–1987 (in Arabic) (Cairo, 1987) is E £17,149 billion. The exact figure for 1985–86 is E £26,572 billion:Google ScholarCentral Bank of Egypt, al-Majalla al-Iqtiṣādiyya 26, 2 (1986), 170.Google Scholar

21 USAID 1979, 4.Google Scholar

22 Al-Ahrām al-Iqtiṣādī, 19 05 1986, 33.Google Scholar

23 USAID, 1979, 41.Google Scholar

24 USAID, EP, 1986.Google Scholar

25 Ibid., 20.

26 Ibid., 9.

27 Figure cited by minister of electricity in al-Muṣawwar interview; see al-Muṣawwar, 9 08 1988.Google Scholar

28 USAID, EP, 1986, 11.Google Scholar

29 Information given out by the head of the board of directors of Egyptgas, ʿAbd al-Hamid Abu Bakr; see the press, especially al-Wafd, 6 06 1985.Google Scholar

30 See statement given by the head of the Communications Organization, al-Ahrām, 3 03 1988.Google Scholar

31 A1-Ahrām al-Iqtiṣādī, 19 05 1986, 33.Google Scholar

32 A1-Ahrām, 2 08 1987. This figure is confirmed by the food items subsidy issued by the Ministry of Supplies. Calculated on the free-market exchange rate.Google Scholar

33 Exception should be made for 1988 when the bill went up sharply due to the drought caused by the high price of wheat in the United States.

34 A1-Ahrām, 19 08 1988.Google Scholar

35 Minister of supplies, al-Ahrām, 2 08 1987.Google Scholar

36 E £110 million is the sum mistakenly given by the minister.

37 On another occasion, the same official stated in July 1987 that the total value of the subsidy for basic foods and other essentials was E £1.84 billion. Of this E £l.140 billion is for the coupon subsidy and E £700 million for bread; statement by Galāl Abū al-Dhahab, minister of supplies, see al-Ahrām, 30 07 1987. The variations in figures, though small here, are perhaps due to the difficulty of taking everything into account. For instance, in the case of soap, the quota listed above is two cakes, but in fact other forms of soap such as powdered soap are distributed by coupons too. The figures do not include the subsidy cost for other food products and clothing managed by the Ministry of Supplies.Google Scholar

38 This comes to about E £4 billion, confirming the earlier figures from the same source.

39 Government of Egypt, Ministry of Supplies, Subsidies List by Item, 1986.Google Scholar

40 It reached $179 million in 1988 according to President Mubarak; see speech in al-Ahrām, 19 08 1988.Google Scholar

41 Minister of supply interview with al-Ahrām, 12 03 1988.Google Scholar

42 IBRD, Development Research Department, discussion papers, no. 289 (Washington, D.C., 1987).Google Scholar

43 Ibid.