Egypt exceeds annual fuel subsidy budget by $9.8B

Egypt exceeds annual fuel subsidy budget by $9.8B
Sun Jun 1, 2014 20:01:27

Egypt has announced that it will have to spend 70 billion pounds ($9.8 billion) more on energy subsidies than it has already budgeted for the fiscal year ending on June 30, despite receiving billions of dollars in complementary fuel deliveries from some Persian Gulf Arab regimes since the military-ouster of elected president Mohamed Morsi in July 2013.

Egyptian state-owned media cited the military-installed Interim Prime Minster Ibrahim Mahlab as saying late Saturday that the energy subsidy bill would reach 170 billion Egyptian pounds.

This is while the latest finance ministry data showed the budgeted amount for petroleum subsidies at 99.6 billion pounds.

Officials had previously put this year's spending on energy subsidies at 130 billion pounds.

The development reflects the crippling impact of Egypt’s energy subsidy system on state finances.

Egypt is expected to post a budget deficit of 12 percent in the next fiscal year.

This is while energy prices in Egypt are among the lowest in the world, as the cash-strapped government spends more than a fifth of its annual budget to keep them down.

Successive governments have called for reform but none have dared to push through major price hikes for fear of inciting unrest.

Artificially low prices for electricity, butane and fuel at filling stations provide little incentive for Egyptians to curb consumption, despite a fuel supply crisis that frequently causes blackouts.

Meanwhile, Egypt's President-elect and former military chief Abdel Fattah al-Sisi has said very little about subsidy reform during his election campaign last month aside from assuring voters that reforms must be gradual.

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