In the fiscal year 07/08, the Egyptian Government spent more than US$ 15 billion on subsidies, accounting for about 30% of total public expenditures and including an astounding US$ 11 billion in energy subsidies. While all subsidies typically defeat their own purpose, the Egyptian system of blind subsidies, i.e. subsidizing a certain good at the source, is particularly ridiculous. A gallon of gasoline costs US $1.2 at retail price; around half of what its unsubsidized price would be, for rich and poor alike. Government subsidizes flour in order to lower the prices of bread for poorer consumers, which leads owners of subsidy-receiving bakeries to smuggle their share of flour to commercial bakeries, leaving consumers to fight over limited quantities of subsidized bread. Even when the government intervenes to make sure this does not happen, consumers buy more bread to use for other purposes, mainly as chicken feed.
In all cases, subsidy is always bad policy. A free market always corrects itself and the effect of a subsidy on the price of a particular good is always neutralized, if not overridden, by the rise in prices of other goods. However, cuts in subsidies are always painful to beneficiaries and, by extension, governments. Therefore, the chief goal of our program on subsidies is to provide for socially adequate arguments for the removal of all subsidies. This will require a thorough and sympathetic study of the socio-economic factors of such a radical measure. Also, this program will be responsible for countering similar interventionist policies, e.g. minimum wage or price ceilings, which are not currently imposed in Egypt.