The implications of phasing out energy subsidies in Egypt

Due to the distortions they create, the Egyptian government finally decided to phase out energy subsidies. This paper is an attempt to assess the dynamic and welfare implications of phasing energy subsidies. The paper also attempts to evaluate a number of policies designed to reduce the burden of phasing out energy subsidies on consumers. A policy of gradual elimination of energy subsides combined with gradual elimination of tariffs is found to reduce the burden of subsidy removal substantially.