Egypt’s fuel subsidy bill falls 15% in 1H2018-19

State’s fuel subsidy bill falls 15% in 1H2018-19: Egypt’s fuel subsidy bill fell 14.7% y-o-y in 1H2018-19 to EGP 43.5 bn, Oil Minister Tarek El Molla told Reuters on Wednesday. Egypt is expecting to spend around EGP 90 bn in total on fuel subsidies in the fiscal year ending in June. Falling spending on fuel subsidies will be welcomed by the IMF, which held back on the latest USD 2 bn tranche of a USD 12 bn loan as it wanted to see how the country would continue to cut subsidies while implementing a new fuel pricing mechanism for 95 octane fuel.

Trial balloon: The new mechanism will allow the price of fuel move up or down 10% in tandem with global markets when it is implemented in April. The government has plans to extend that fuel pricing mechanism to other grades of fuel. In related news, Egypt’s consumption of fuel and natural gas fell 1.2% y-o-y in FY2017-18, according to Mubasher.