Egypt Slashes Energy Subsidy Spending in New Budget
Egypt Slashes Energy Subsidy Spending in New Budget
(Bloomberg) -- Egypt’s parliament on Monday approved the budget for the next fiscal year that starts in July, with state spending on costly fuel and electricity subsidies cut sharply as part of the broader plan to shore up government finances.
Under the fiscal 2019-20 budget, spending is set at 1.6 trillion Egyptian pounds ($95.8 billion), up 150 billion pounds from the current fiscal year, the state-run Middle East News Agency reported.
The government set an economic growth target of close to 6% for the next fiscal year, rising to between 6.5%-7% in the medium term, the Finance Ministry said in a statement.
Egypt is pushing ahead with an economic program that was launched in 2016 and aimed at kickstarting an economy that had sputtered after the 2011 uprising that ousted Hosni Mubarak. The cornerstone of the program was a devaluation of the pound that helped secure a $12 billion International Monetary Fund loan. That, in turn, helped attract foreign inflows in local debt.
Key to the program was cutting costs. Spending on fuel subsidies was slashed by almost 40%, to 53 billion pounds, while electricity subsidies are to drop by 75% to 4 billion pounds. Public investment is set to rise to 140 billion pounds, or up by 40%.
The government is expected to raise fuel prices around the start of the fiscal year -- an increase economists say could result in a temporary spike in the inflation rate.
To contact the reporters on this story: Mirette Magdy in Cairo at mmagdy1@bloomberg.net;Abdel Latif Wahba in Cairo at alatifwahba@bloomberg.net
To contact the editors responsible for this story: Lin Noueihed at lnoueihed@bloomberg.net, Tarek El-Tablawy
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