Egypt’s government approved cutting subsidies from high-class 95-octane gasoline as of Wednesday, Ashraf Al-Arabi, minister of planning and international cooperation, stated.
Al-Arabi added during a press conference held at Egypt’s Cabinet Office Wednesday that the government will start distributing fuel to car owners through a coupon system as of April.
Rationalising subsidies was put on the government to-do-list by demand of the International Monetary Fund last year, seen as a condition of the Fund approving a $4.8 billion loan to the Egypt.
On Tuesday, Egypt reached a staff-level agreement with the IMF’s technical team, currently visiting Cairo, on the loan. The agreement is expected to open the door to some $14.5 billion in financing, allowing Egypt to implement an economic programme it outlined to the IMF.
The government announced in the 2012/2013 budget a cut of subsidies for energy to LE70 billion. Many experts estimate that the government goal is too optimistic. Last year, subsidies were set to reach some LE95 billion in the budget, but are estimated to have actually reached LE115 billion.
Earlier this month, Reuters reported that Egypt could save LE35 billion ($5.7 billion) a year with planned energy subsidy reforms.