Cairo remains steadfast in its commitment to phase out fuel subsidies, aiming for cost recovery by December, according to the International Monetary Fund (IMF).
Ivanna Hollar, the IMF mission chief for Egypt, reiterated this pledge, emphasizing the unchanged goal of aligning fuel prices with actual costs.
This move is a key component of Egypt’s economic reform program, designed to reduce a substantial current account deficit.
The IMF recently approved a $1.2 billion disbursement to Egypt, following the fourth review of its $8 billion loan program.
Egypt’s current account deficit surged to 5.4% in the 2023/24 fiscal year.
The IMF projects a gradual reduction, anticipating a 3.5% deficit in the 2025/26 fiscal year.
Factors contributing to the deficit include Suez Canal disruptions and challenges within the energy sector.
Despite previous price hikes, Egypt continues to expend approximately 10 billion Egyptian pounds monthly on fuel subsidies.
Prime Minister Mostafa Madbouly confirmed the government’s ongoing financial reform efforts.
While complete cost recovery for diesel may not be immediately attainable, the government intends to eliminate the financial burden of petroleum subsidies by year’s end.
The reduction of these subsidies aims to alleviate pressure on Egypt’s economy.
