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Egypt Pricing and Subsidy
Sources: The Library of Congress Country Studies; CIA World Factbook
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    Beginning in 1952 the government initiated a program of price controls that included both indirect taxation and subsidies. The aim was to reallocate resources to serve various goals ranging from industrialization to social welfare, but the effects were mixed. In agriculture, for example, the state set the price of agricultural inputs, such as fertilizers and pesticides, and crops, especially cotton and sugar. Some basic consumer commodities, especially food and energy, and services, such as education, were subsidized to make them available for the bulk of the population. In industry, public enterprises paid subsidized rates for energy but had to sell their products to consumers at fixed, low prices.

    Price distortions and subsidies were magnified over time, resulting in the misallocation of resources and straining the government budget. For example, in 1987 the ratio of consumer price per kilowatt-hour of electricity to production and distribution costs was less than 0.25. This shortfall, coupled with rising consumption, contributed to a growing government deficit, which compelled the government to reconsider its pricing policy (see Energy; Manufacturing; Agriculture , this ch.).

    Data as of December 1990

    NOTE: The information regarding Egypt on this page is re-published from The Library of Congress Country Studies and the CIA World Factbook. No claims are made regarding the accuracy of Egypt Pricing and Subsidy information contained here. All suggestions for corrections of any errors about Egypt Pricing and Subsidy should be addressed to the Library of Congress and the CIA.

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Revised 10-Nov-04
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