Egypt’s new budget and the decrease of electricity and fuel subsidies show that Egypt is committed to the fiscal consolidation as well as the economic reform, which is supported by the country’s International Monetary Fund (IMF) program, the rating agency Fitch Ratings stated on July 12, according to Amwal Al Ghad.

“Narrowing the fiscal deficit supports Egypt’s sovereign credit profile, but significantly reducing the public debt ratio is a multi-year task.” Fitch said.

“Measures already legislated for (including civil service reform and the introduction of VAT), together with the IMF programme, provide a stronger policy anchor. But political sensitivity to the social impact of spending cuts and high inflation still presents implementation risk,” the statement explained.

Fitch further added that “headline inflation was 29.8% yoy in June and is set to rise back above 30% following the energy price hikes. The central bank raised interest rates by 200bp for the second consecutive policy meeting on July 6 with the aim of controlling inflation expectations,” it added.

Late June, Egypt’s Cabinet decided to cut fuel subsidies in order to ease the budget deficit. The decision led to an increase in benzene and diesel prices. Egyptian Prime Minister, Sherif Ismail, said that economic reform decisions on the part of the state could no longer be delayed.