News

Egypt to Slash Fuel Subsidies by 43%: Finance Minister

Egypt to Slash Fuel Subsidies by 43%: Finance Minister

A worker holds up a fuel pump nozzle after filling up the tank of a car at a petrol station in Cairo October 3, 2012. REUTERS/Mohamed Abd El Ghany
A worker holds up a fuel pump nozzle after filling up the tank of a car at a petrol station in Cairo October 3, 2012. REUTERS/Mohamed Abd El Ghany

Egypt will reduce subsidies on petroleum products by almost 43 percent in the 2016/2017 budget, Finance Minister Amr al-Garhy said at a news conference Saturday, according to Reuters.

Energy subsidies will fall from approximately EGP 61 billion in the 2015/16 fiscal year to EGP 35 billion in 2016/17, he said.

However, the deputy finance minister for fiscal policy, Ahmed Kojak, noted that the majority of the subsidy cuts will be accounted for by the decline in global oil prices, meaning it will not have as bad an effect on consumers as if the price of oil would have been higher.

“Most of the savings in petroleum product subsidies will be a result of lower global oil prices,” the deputy minister 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,” he added.

The Finance Ministry is aiming to reduce domestic debt to 97 percent of GDP from this year’s 98 percent, according to Finance Minister al-Garhy.

Energy subsidies have for long been an issue of contention in Egypt since millions depend on low-cost energy products, while the state looses millions every year by selling energy at well below market prices.

Cutting subsidies have the potential of angering Egypt’s poor, who five years after the January uprising still live in poverty, and could spark further social unrest.

In 2014 president Abdel Fattah al-Sisi made the controversial decision to slash energy subsidies overnight, leading to drastically higher prices of fuel, angering taxi drivers, transport workers, as well as regular consumers. Defending the move, Sisi said the subsidies had failed to reach the people who they were aimed to help and instead mainly benefited the rich.

Former president Hosni Mubarak was careful not to touch the subsidies, being acutely aware of the potential danger such a move could pose to the stability of his regime.

In 1977, president Anwar Sadat slashed subsidies on basic foodstuffs, sparking a massive “bread uprising”, which was only ended with the deployment of security forces to the streets and the reenactment of the subsidy regime. Since then, Egypt’s leaders have been wary to raise prices on staples.

The current government is struggling to revive Egypt’s economy after five years of instability that have seen investors and tourists shun the country, causing foreign currency reserves to dwindle.

Egypt Will 'Most Likely' Remain Closed for Russian Tourists in 2016: Russian Official
German Industrial Giant to Modernize Egypt's Railway Networks

Subscribe to our newsletter


News

More in News

Tourists pictured returning from the beach in the Egyptian resort of Sharm El-Sheikh on November 7, 2015 (AFP Photo/Mohamed El-Shahed)

Germany Lifts Last Restrictions on Flights to Egypt’s South Sinai

Aswat MasriyaJanuary 24, 2017
regeni

Giulio Regeni ‘Leaked Video’ Aired on Egypt State Television

Egyptian StreetsJanuary 24, 2017
download-5

Trump Calls Sisi, Discusses Terrorism and Boosting US-Egypt Ties

Egyptian StreetsJanuary 24, 2017
A pharmacist searches for medicine at a pharmacy in Cairo, Egypt, November 17, 2016. REUTERS/Mohamed Abd El Ghany

Egyptian Military Forms Pharmaceutical Company

Egyptian StreetsJanuary 23, 2017
Egypt's military prepares ahead of new operations against militants in Sinai

Five Soldiers Killed in Ambush in Egypt’s North Sinai

Egyptian StreetsJanuary 23, 2017
61320490

Egypt Knocked Out of Handball World Championships

Egyptian StreetsJanuary 23, 2017
egypt

Egypt Defeats Uganda in African Cup of Nations

Egyptian StreetsJanuary 22, 2017
Egypt's Karim Abdel Gawad and France's Camille Serme

Egypt’s Karim Abdel Gawad Wins Tournament of Champions in New York

Egyptian StreetsJanuary 21, 2017
Egyptian Streets is an independent, young, and grass roots news media organization aimed at providing readers with an alternate depiction of events that occur on Egyptian and Middle Eastern streets, and to establish an engaging social platform for readers to discover and discuss the various issues that impact the region.

© 2016 ES Media UG. All Rights Reserved.