Egypt to save $230m by ending fertiliser subsidies

11 February 2009

Egypt will scrap fertiliser subsidies at the end of the year, according to an announcement by Agriculture Minister Amin Abaza on 10 February.

The government will save some £E1.3bn ($230m) a year by scrapping the subsidies on fertilisers, equivalent to about 0.1 per cent of gross domestic product (GDP).

Abaza said that the government was looking at supporting farmers in other ways, possibly by removing restrictions on crop prices.

The moves could lead to an increase in inflation as food accounts for 44 per cent of the basket of goods used to calculate the consumer price index in Egypt.

However, inflation is falling in Egypt as the economic slows sharply and global prices of staple foods plunge.

Urban inflation was 14.4 per cent in January, down from 18.3 per cent in December. Inflation peaked in August last year at 23.6 per cent.

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