Fuel subsidies cost has reached EGP 27.5 billion during the second quarter of fiscal year (FY) 2017/2018 based on Brent price averaging at $61.4 per barrel and USD exchange rate at EGP 17.63, according to the Egyptian Minister of Petroleum and Mineral Resources, Tarek El Molla, Egypt Oil & Gas reports.

The cost of Egyptian fuel subsidy has increased by 34% during the first half of FY 2017/2018, reaching EGP 51 billion, from EGP 38 billion, El Molla announced, according to Amwal Al Ghad.

“Fuel products subsidies have reached about 51 billion pounds in the first six months of the current fiscal year, but we are still 4 billion pounds below allocated amounts for fuel subsidies in the 2017-18 budget,” El Molla told Reuters.

The Egyptian government has allocated EGP 110 billion in the budget for fuel subsidies during FY 2017/2018.

Fuel subsidies cost is affected by a number of aspects, including local consumption rate, global oil prices, and currency exchange rate, as the minister explained.

Eliminating most of the fuel subsidies is a key recommendation of the International Monetary Fund’s (IMF) recent report on Egypt, which showed progress in many macroeconomic indicators, Egypt Oil & Gas earlier reported.

The international organization believes that “gas subsidies benefit mainly the rich,” advising the Egyptian government to allow fuel prices to change in line with costs. “This would protect the budget from movements in global oil prices and the exchange rate, and safeguard priority spending on social programs and necessary infrastructure,” the IMF stated.