Egypt to increase fuel prices by 35-45% in Q1 of FY2018/19

Fuel prices in Egypt are expected to rise between 35 percent and 45 percent in the first quarter of financial year 2018/2019.

The Egyptian government is aiming at cut fuel subsidies to 89 billion Egyptian pounds in FY18/19, from 120.9 billion pounds in the current fiscal year, according to a recent report by Beltone Financial Holding on Wednesday.

The increase in the prices of petroleum products could raise the North African nation’s inflation rate by 3% to 5%, the report stressed.

Beltone forecast the international oil prices to hit an average of $69.8 per barrel (pb) in FY18/19, while Egypt’s key interest rates would remain the same during the first half of the coming fiscal year due to an increase in inflation rate.

Finance minister Amr El-Garhy on Wednesday said that slashing fuel and electricity subsidies is still under study.

On Tuesday, a government document has shown that Egypt plans to curtail fuel subsidies by 26% to EGP 89.075 billion ($5.05 billion) in fiscal year 2018/19, compared to an estimated subsidy of EGP 120.926 billion in FY17/18.

The government aims to reduce electricity subsidies as well by around 47%, or EGP 16 billion ($906 million), in FY18/19, Reuters reported, citing the document.

The Arab world’s most populous country also seeks to raise food subsidies by 5% to EGP 86.175 billion ($4.88 billion) for the same fiscal year, the London-based new agency highlighted.

The Egyptian cabinet had cut fuel subsidies and raised petroleum product prices in June 2017.