Egypt allocated EGP 120 billion ($2.26 billion) for energy subsidies in the upcoming FY2026/2027, down from about EGP 150 billion in the current fiscal year, a roughly 20% cut, Finance Minister Ahmed Kouchouk said in a press conference on April 11.
The budget was prepared before the escalation of the US‑Israeli war on Iran. It assumes an oil price of $75 per barrel and an exchange rate of EGP47 to the dollar. On the day of the conference, the dollar was trading at around EGP53, and Brent crude oil was hovering around $95 per barrel.
Kouchouk noted that the government remains mindful of various risks that might necessitate a revision of these budgetary figures. He explained that both the volume and share of reserves in the new budget have been expanded to mitigate existing and emerging threats, specifically accounting for unique regional instabilities and the resulting economic hardships.
Egypt has been following a phase-out program for the energy subsidies as part of its reforms linked to the $8 billion loan agreement with the International Monetary Fund. It halved the energy subsidies in the 2025/2026 budget compared to the previous year’s figure.
Since the onset of the US‑Israeli attack on Iran, which led to the closure of the Strait of Hormuz—through which 20% of global energy supply passes—international oil prices surged above $100 per barrel. In response, the Egyptian government raised fuel prices in March by 14%-17% in an effort to absorb market volatility and ease exchange‑rate pressures.
Meanwhile, electricity subsidies in the new budget are set to rise by 39% to EGP 104.2 billion to support the sector and enhance the infrastructure of transmission and distribution networks
He said the new budget is built on expectations of easing inflation to around 9.3%, alongside continued efforts to narrow the fiscal deficit and reduce public debt. The overall deficit is projected to decline to 4.9 % of GDP in the FY2026/2027, down from an estimated 6.1 %in the current fiscal year, which ends on 30 June 2026.
