Asharq Al-awsat English Middle-east and International News and Opinion from Asharq Al-awsat Newspaper

Egypt Plans to Cut Spending on Fuel Subsidies by 47%

Egypt Plans to Cut Spending on Fuel Subsidies by 47%

Thursday, 23 April, 2020 - 10:00

Egypt plans to cut spending on fuel subsidies by 47% in its 2020/21 budget to 28.193 billion Egyptian pounds ($1.8 billion), an explanatory note for its draft budget published showed. It allocates 52.963 billion pounds for fuel subsidies for the 2020/21 fiscal year.

Last December, Egypt’s Minister of Petroleum Tarek al-Mala said that support for petroleum products fell to 7.250 billion pounds ($451.4 million) in the first quarter of the fiscal year 2019-2020, compared with 13 billion pounds estimated in the budget, compared to 23.25 billion pounds a year ago.

The explanatory note of the budget project showed that the government is targeting revenue of 620 million pounds ($36.5 million) from offering new licenses for iron and cement production.

The cement sector in Egypt is witnessing a severe recession due to a glut in supply. This threatens the industry and has already led to the closure of some factories.

In other news, the Central Bank of Egypt has raised individuals’ cash withdrawal limit during the Muslim fasting month of Ramadan through ATM machines, from 5,000 Egyptian pounds to 20,000 Egyptian pounds daily, head of the Federation of Egyptian Banks Mohamed El-Etreby announced on his Facebook page.

Cash withdrawal through bank tellers has been raised from 10,000 Egyptian pounds to 50,000 Egyptian pounds ($3174) daily, Etreby added.

At the end of March, the central bank set a cap on individual withdrawals from banks and ATMs, in a move then apparently aimed at controlling inflation during the spread of the novel coronavirus.

Meanwhile, a Reuters poll showed that Egypt’s economy will grow at a 3.5% clip in FY2020-2021, down from 5.9% in a similar poll just three months ago, before the spread of the COVID-19 disease.

Growth for the current fiscal year will come in at 3%, a downgrade from a previous estimate of 5.8%, according to the 20 analysts polled.

The economy expanded 5.6% in 1H2019-2020 but is expected to slow substantially in the second half of the fiscal year as the covid-19 pandemic causes widespread domestic disruption and the global economy enters one of the deepest recessions in living memory.

Editor Picks