Country Risk

Public reaction to subsidy reduction programme will be a key indicator of political stability in Egypt

07 July 2014


The Egyptian cabinet on 4 July reduced subsidies on electricity, natural gas and fuel for industrial and private users.

Subsidy reform is a pressing issue for Egypt given that the cabinet forecasts a budget deficit of 14%. IHS has assessed that economic protests are the key threat to Egypt's political stability in the coming years. The poorest strata of Egyptians typically use 80 octane petrol and diesel, the prices of which rose by 77% and 64% respectively.

The cabinet promised that prices of other goods would not rise by more than 10%. The army and the government said they would also provide additional subsidised goods in state-run co-operatives, while smart cards, which have been partially introduced, would be used to allow the poorest citizens to buy subsidised goods.

(129 of 326 words)