Egypt is to reduce spending on fuel subsidies by nearly 43 percent in the 2016-2017 budget due mainly to lower global energy costs, officials said on Saturday.
Egyptian Minister of Finance Amr el-Garhy told a news conference state energy subsidies would fall to 35 billion Egyptian pounds (US$3.94 billion) from about 61 billion pounds in the 2015-2016 budget.
Consumers reacted angrily when the government cut spending on energy subsidies in mid-2014, a measure that caused domestic prices of natural gas, diesel and other fuels to rise by as much as 78 percent. They were reduced again in the current budget.
However, Egyptian Deputy Minister of Finance for Fiscal Policy Ahmed Kojak said a decline in international oil prices would account for the bulk of the reduced subsidy spending in the next fiscal year.
“Most of the savings in petroleum product subsidies will be a result of lower global oil prices,” Kojak said. “There is also a saving of about 8-10 billion [Egyptian] pounds that will come as a result of new reforms that the Petroleum Ministry will outline in agreement with us.”
Egypt’s annual urban consumer price inflation eased slightly to 9 percent last month from 9.1 percent in February, the official statistics agency CAPMAS said on Sunday.
It was the third consecutive decrease after the nation raised interest rates by 50 basis points in December last year, citing inflationary pressure.
In November last year, the government said it would control prices of certain essential goods.
Egypt is struggling to revive its economy since a popular uprising in 2011 shook investor confidence and drove tourists and foreign investors away. Its foreign currency reserves stood at US$16.56 billion last month, down from about US$36 billion in 2011.
Subsidies eat up a big chunk of the budget. Egyptian President Abdel-Fattah al-Sisi has approved a draft state budget that reduces the budget deficit in the 2016-2017 fiscal year to 9.8 percent of GDP from the current 11.5 percent.
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