ASSESSMENTS

Amid Rising Inflation, Egypt Mulls More Subsidy Cuts

MIN READFeb 3, 2022 | 17:00 GMT

A gas station worker counts cash collected from customers in Cairo on June 29, 2017, after Egypt’s government slashed fuel subsidies. 

A gas station worker counts cash collected from customers in Cairo on June 29, 2017, after Egypt’s government slashed fuel subsidies. 

(KHALED DESOUKI/AFP via Getty Images)

Egypt’s government will seek to reform its subsidies scheme in 2022 to reduce state spending amid rising inflation, which other countries in the region could emulate. While protests are possible, widespread social unrest in Egypt is unlikely due to the security apparatus’ firm control of the country. Macroeconomic reform will be a high priority for Egypt in 2022 as it continues the reform process that President Abdel Fattah al-Sisi’s administration started when it took office in 2014. In particular, rising inflation is incentivizing the government to reduce subsidies that weigh on state finances. Changes to government subsidies are particularly impactful in Egypt, where nearly 30% of its 100 million people live below the poverty line. Annual inflation rose to 6.2% in November 2021 and is anticipated to rise further in early 2022 due to global price increases in products like energy and food -- all of which will have an...

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