El Garhy: No Fuel Subsidy Cuts in FY 2017/2018

El Garhy: No Fuel Subsidy Cuts in FY 2017/2018

The government has no plans to cut fuel subsidies during fiscal year (FY) 2017/2018, Egypt’s Finance Minister, Amr El Garhy, told the press on Wednesday, Ahram Online reports.

Garhy’s statement follows the release of an IMF report earlier this week that called for further reductions in Egypt’s fuel subsidies. According to the report, the Ministry of Petroleum will submit a plan to the Prime Minister later this month for the indexing of fuel prices to market conditions. No timeline, however, was given for the implementation of the new pricing mechanism.

During FY 2016/2017, Egypt reduced its fuel subsidies, raising costs for domestic consumers. The subsidy cuts did not produce significant fiscal savings, the IMF report noted, because the depreciation of the pound largely offset the price increases.

Due to this lack of fiscal savings, Egypt missed its target for reducing its fuel subsidy bill, Zawya reports.

Despite falling short of its targeted reduction in fuel subsidies in FY 2016/2017, the IMF notes that Egypt’s expenditures on fuel subsidies should fall by 0.5% of GDP during FY 2017/2018.

FY 2017/2018 began on July 1st, 2017 and will continue until June 30th, 2018.

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