ICEC

Egypt to continue to cut energy subsidies to reduce govt. expenditure

Egypt’s Minister of Petroleum and Mineral Resources Tarek el-Molla said on Tuesday at the Arab Energy Forum in Marrakech that Egypt would continue to cut energy subsidies to reduce government expenditures while boosting energy efficiency.

The minister said that energy subsidies represented a burden to the country’s budget and drained finances that could otherwise be spent on improving social services.

El-Molla added that oil subsidisation encourages smuggling, while noting that Egypt has spent $30 billion on oil subsidies in the past five years.

Egypt has been implementing substantial cuts to energy subsidies along with other fiscal measures implemented as part of a program to obtain an IMF loan of $12 billion in 2016.

The fuel subsidy cuts are part of the economic reform package adopted in July 2014 that aimed to ease the country’s growing budget deficit, with a five-year plan created to gradually scrap all fuel subsidies by 2019.

The IMF-supported reform programme included the liberalization of the country’s currency in November 2016, as well as the implementation of a value-added tax (VAT).

Fuel prices have increased nearly 500 percent since July 2014.

Source: Reuters

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