The Egyptian Minister of Petroleum and Mineral Resources, Tarek El Molla, stated that Egypt is studying every possible method including increasing prices in order to reduce fuel subsidy’s expenditure in fiscal year 2016/2017, reported Al Borsa.
The amount allocated for oil subsidies in the country’s current budget stands at EGP 35b. However, Petroleum Expert, Mohamed Shoeib, expects that the cost of subsidies will eventually increase due to the volatile currency exchange rates and the possibility of EGP devaluation.
This comes on the heels of the IMF’s announcement that the $2.5b first tranche of the fund’s $12b loan will be made available to Egypt after the IMF’s executive board reviews the program, with the country’s funding package being presented by the end of October or early November. Furthermore, the fund’s Managing Director, Christine Lagarde, stated on the that “the IMF needs to evaluate the economic reforms of the Egyptian government,” as Egypt almost completed the required measures for the loan, yet some actions related to the exchange rate and subsidies are still pending.
In related news, Minister, Tarek El Molla, stated that Egypt’s fuel subsidies decreased during fiscal year 2015/2016 by 28.7% from the year before, as the country aims to reduce costly energy assistance that consume a large portion of the state budget.