An official with the Egyptian government sated that Egypt will lift fuel subsidies and subsequently increase selling prices of petroleum derivatives by 20% to 25%. He estimated that the government will implement the increase by the end of October, ahead of the International Monetary Fund’s (IMF) meeting to decide on Egypt’s $12b loan, reported Al Borsa.
The source added that the government will most probably resort to the use of fuel smart cards in petrol stations to expedite the implementation of the new rates. He also estimated that lifting fuel subsidies will result in an increase in electricity tariffs. He concluded that the government is working on means to alleviate the incremental affect the rise in fuel prices will have on the country’s inflation rate.
The amount allocated for oil subsidies in the Egypt’s current budget stands at EGP 35b, based on a per barrel price of $40 and a USD-to-EGP exchange rate of 9.25.
Egypt Oil&Gas reported earlier that the Egyptian Minister of Petroleum and Mineral Resources, Tarek El Molla, had stated that Egypt was studying every possible method, including the increase of prices, to reduce fuel subsidyexpenditure in the fiscal year 2016/2017. El Molla comments came as the IMF announced that the $2.5b first tranche of the fund’s loan will be made available to Egypt by the end of October or early November, pending board’s approval. The fund’s Managing Director, Christine Lagarde, had added that “the IMF needs to evaluate the economic reforms of the Egyptian government,” as Egypt had almost completed the required measures for the loan, yet some actions related to the exchange rate and subsidies were still pending.