( AP ) - Egypt's prime minister said Thursday that the government will push ahead with its overhaul of the economy by scrapping consumer subsidies, but the powerful president cast doubt on the idea by quickly voicing his opposition.
Activist groups also decried the plan, saying it would be a harsh blow in a country where one of every five people is officially classified as living in poverty and many others struggle in their daily lives.
Premier Ahmed Nazif said the nearly half-century system of using subsidies to hold down the retail costs of food, energy and services would be replaced by a welfare program that would pay cash to the truly needy.
This will ensure "social justice," said Nazif, who has sought to liberalize the economy by loosening government controls, selling state enterprises to private ownership and providing help for people to start small businesses.
"The Egyptian people have long been convinced subsidies go to those who don't deserve them," Nazif said in an interview with the official Radio Cairo that also was reported by the state-owned Middle East News Agency.
Nazif is a close ally of President Hosni Mubarak, but within hours the president told pro-government newspapers that "no one has the right to lift or cancel subsidies without the approval of the president."
"I will not lift the subsidies ... the price of bread will not go up," Mubarak said while en route to Lisbon, Portugal, for a weekend European Union-African Union summit, according to the Friday edition of the newspaper Al Gomhuria.
Mubarak, who was been president since 1981, didn't rule out changes to the subsidy program at some point, however. He said there first must be discussions at the grass-roots level "to reach an appropriate formula to ensure subsidies reach those really in need."
Under the socialist-oriented regime implemented in the 1960s by the late President Gamal Abdel Nasser, subsidies are part of a state-controlled wage system.
Staples like bread, sugar, cooking oil and beans as well as public transportation and gasoline are heavily subsidized. Low-cost food is provided through ration cards given to the poor, but all Egyptians enjoy low fares for public transit and cheaper energy.
Nazif said subsidies have cost the government some $10 billion so far this fiscal year, which ends next June. The Cabinet had planned for spending only $12 billion for the full year, compared to $9 billion in the previous fiscal year.
Nazif said the government was considering different plans for a new program, including a food-stamp system that would go only to those deemed destitute.
Opposition activists warned that ending subsidies could spark social unrest, especially among the millions of poor Egyptians who rely heavily on government help to afford food, transportation, water and energy.
"This is a red line the government should not even think to cross," said Mahomoud el-Askalani of Citizens Against High Cost of Living.
The group was recently set up to lobby against any move to abolish subsidies and other social aid programs. Its membership includes opposition legislators, intellectuals and political activists who blame the government's economic policies for recent rises in prices.
The World Bank recently estimated that the percentage of Egypt's 78 million people who must live on less than $2 a day rose from 16.7 percent in 2000 to 19.6 percent in 2005. It said the poor live mostly in southern rural areas where there is wide unemployment.