Facts, and figures

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The government is seriously considering reducing, and in many cases ending, subsidies on basic consumer goods, including bread and fuel. At the same time officials constantly trumpet their successful economic record, citing endless figures to support their claims.

It is the government, of course, that compiles the figures. But as any student of economics knows figures can be manipulated. Official data may be interpreted one way while the story on the ground follows a very different plot.

The government says that it is proud of engineering economic growth rates of 6.8 to seven per cent for the fiscal year 2006/2007. Breakdown the figures, however, and it becomes clear that the engine behind this growth was primarily increased investment in real estate, not the productive sector. The growth of which officials are so proud has completely by-passed Egypt's industrial, productive base, though this is an inconvenient fact that they constantly brush beneath the carpet.

It is on the back of this non-productive growth, expressed largely in increasing property prices, that officials now feel that they can move further down the road of economic liberalisation and cancel state subsidies on basic consumer goods. Why should car owners, who are automatically assumed to be comfortably off, benefit from subsidised fuel, argue proponents of the end to subsidy. Why should they eat subsidised bread when they can afford to pay market prices? Why should the state subsidise anyone who can manage without such support?

The questions are valid ones, but only if they are being asked in order to formulate a system under which subsidies go to those who need them and are distributed in a manner that is fair to those on limited incomes and to the government.

The price of crude oil has skyrocketed, hovering around the $100 a barrel mark for much of last week. Such increases are naturally alarming to governments that rely on oil imports. Egypt, though, imports just 20 per cent of its oil supplies. The remaining 80 per cent is locally produced. Yet still officials decided to cite the increase in the price of crude as making a compelling case for the government to end fuel subsidies.

One has to wonder at such a deliberate twisting of facts, the sole purpose of which seems to be to provide cover for the systematic failure to improve underlying economic conditions. Instead of creating opportunities for genuine economic growth based on production rather than consumption, the government feels it can get away with cancelling subsidies and pretending it has to. It does not.

It will, however, have to figure out a way to contain public outrage when subsidies are cancelled. Twenty per cent of Egypt's population live below the poverty line, and a further 20 per cent lives on it. Forty per cent of the Egyptian population living in poverty is a frightening figure.

They are in no position to survive the harmful policies of the current cabinet, a government that has been happy to sell off national banks to the private sector and to foreigners, and large swaths of originally cheap land to real estate companies from the Gulf leading to a surge in real estate prices.

Prices in Egypt have gone up while the incomes of the vast majority remain static. Not a day passes without a protest or sit-in by workers, government employees and now university professors. Their day to day experience has rendered them immune to the claims and rhetoric of officials. They want decent wages. They are not getting them. For a decade now the government has been washing its hands of any responsibility for their welfare.