CAIRO: Egyptian fuel subsidies will likely climb to LE 66 billion ($12 billion) in the current fiscal year to June 30, the oil minister said on Tuesday.
The government has said it wants to better target subsidies to the most needy in a country where a fifth of its 78 million people live on less than $1 a day. Economists say targeting subsidies would help cut the budget burden and reduce waste.
“Ten years ago it was LE 1.2 billion. This year we expect it at LE 66 billion, Sameh Fahmy told business executives at an American Chamber of Commerce in Egypt event.
The subsidies were LE 52.7 billion in the previous fiscal year, ministry data showed.
Egypt subsidizes fuel and other commodities, and also issues ration cards for a basket of consumer goods to a large portion of its citizens.
Fahmy said fuel subsidies were at an “unsustainable level, which throws a significant burden on the petroleum sector, in which state-owned firms play a major role.
Prime Minister Ahmed Nazif told Reuters in September that the focus of subsidies would be narrowed to keep costs down.
Asked whether there were any plans to change the fuel subsidy system, Fahmy said: “For the short term, we don’t have an announcement to declare but for the long term we have a strategy.
The various subsidy programs cost the government some $19 billion in 2008/09, accounting for more than one-third of government spending, according to Finance Ministry data. The government had expected this to drop to 23 percent this year.