Subsidies increase to LE 69B in H1 of 2017/18

CAIRO – 28 April 2018: Subsidies in the first half (H1) of the current fiscal year (July-December 2017) increased to reach LE 69.6 billion, compared to LE 38.6 billion in the same period of the previous fiscal year, data from the state statistics agency CAPMAS show.

Food subsidies reached LE 23.3 billion in the first half of the fiscal year, compared to LE 14.1 billion in the last fiscal year.

Petroleum subsidies, meanwhile, amounted to LE 26.6 billion during the first half.
This is in addition to supporting some state-owned financial institutions with LE 500 million, the data reveal.

Finance Minister Amr el-Garhy said this month that costs of fuel subsidies for fiscal year 2017/18 ranged between LE 110-115 billion.

In the new budget for fiscal year 2018/19, the government is pressing ahead with its plan to trim spending on energy subsidies.

Subsidies on fuel will be cut by around 21 percent, leaving total spending at around LE 89 billion in the new budget. Electricity subsidies will witness a bigger cut of around 45 percent.

The subsidy cuts are part of Egypt’s reform program that saw the country floating its local currency in late 2016, after which Cairo clinched a $12 billion loan from the International Monetary Fund (IMF).

According to the IMF, Egypt’s fuel-subsidies bill has decreased from a peak of 5.9 percent of GDP in 2013/14 to 3.3 percent in 2016/17. It is expected to decline further to 2.4 per cent of GDP in 2017/18.

Another round of fuel subsidy cuts is expected in the new fiscal year that will start in July 2018. The last subsidy cuts took place in June 2017.

Egypt targets a growth rate of 5.8 percent of GDP in the new budget and hopes to reduce the budget deficit to 8.4 per cent of GDP in 2018/19 and achieve a primary surplus of two percent of GDP and reduce public debt to 91 to 92 percent of GDP.