Egypt Edition 
UAE Edition 
Saudi Edition 
MENA <> India Corridor 
Logistics (MENA) 
Climate (MENA) 
Share
The IMF now sees subsidies reaching EGP 744 bn in FY 2025-26, before edging up to EGP 833 bn in the next fiscal year, with energy subsidies making EGP 154 bn of total subsidies this fiscal year, before falling to EGP 140 bn in FY 2026-27, the fund said in its country staff report (pdf) for the fourth review of our USD 8 bn loan program.
(Tap or click the headline above to read this story with all of the links to our background as well as external sources.)
How this compares to gov’t targets: The EGP 154 bn is a little bit higher than the government’s forecast of EGP 150bn for the current fiscal year’s budget. Meanwhile, the figure is lower than the EGP 216 bn the fund had initially penciled in for FY 2024-25 during its third review, before revising it to EGP 159 bn.
Energy subsidies to peak before declining later: Energy subsidies are projected to jump to EGP 180 bn in FY 2027-28, and further climb to EGP 190 bn in FY 2028-29, before dropping to EGP 166 bn in FY 2029-30.
Let’s talk fuel subsidies specifically: Fuel subsidies are projected to reach EGP 79 bn this fiscal year by the Fund, higher than the EGP 75 bn the government had allocated in its FY 2025-26 budget. Looking ahead, the IMF sees fuel subsidies in the country rising to EGP 95 bn in FY 2026-27 and to EGP 130 bn in FY 2027-28.
REMEMBER- Prime Minister Moustafa Madbouly reiterated in March Egypt’s intention to have energy prices reach cost recovery levels by the end of the year, by phasing out all fuel subsidies in line with its structural reform agenda with the IMF. Despite ongoing efforts to reform its subsidy system, the government still spends EGP 366 mn per day and EGP 11 bn a month on fuel subsidies, according to the Oil Ministry.
The government hiked fuel prices at the pumps in April for the first time in 2025, raising fuel prices by 11.8-14.8%.
Fossil fuel subsidy removal and green investments could boost our GDP: The IMF sees Egypt having a significant opportunity to achieve its climate goals and enhance its growth through removing fossil fuel subsidies alongside expanding renewable energy investments. Proper fossil fuel pricing in Egypt, paired with allocating 50% of revenues toward reducing the budget deficit, could boost the country’s GDP by up to 7.3% by 2030 and 13.8% by 2040, the IMF noted.
As for electricity subsidies, the IMF expects them to reach EGP 75 bn during this fiscal year, matching the amount the government allocated in its budget. Looking ahead, these subsidies are projected to drop to EGP 45 bn in FY 2026-27, before gradually increasing to EGP 50 bn in the subsequent fiscal year and to EGP 56 bn in FY 2028-29 and finally to EGP 63 bn in FY 2029-30.
ICYMI– Two government sources told us in May that the Madboully government could push back the electricity price hike planned for this summer. The Electricity Ministry raised electricity prices by 14-40% between August and September 2024.
Fuel + power hikes help restore EGPC’s finances: “Successive and notable fuel and electricity price hikes have begun to restore the finances of the Egyptian General Petroleum Corporation (EGPC) and lay the foundation for price incentives to motivate more efficient consumption behavior and a shift toward a greener economy,” the report read.
Food subsidies projections: The IMF sees food subsidies reaching EGP 153 bn during the current fiscal year, before decreasing to EGP 149 bn for the following three fiscal years. However, a notable jump is foreseen in FY 2029-30, with food subsidies projected to hit EGP 163 bn.
Egypt aims to increase food subsidies spending to 0.7% of GDP this fiscal year. This percentage is then set to be reduced to 0.6% of GDP in the next fiscal year and to 0.5% of GDP in FY 2027-28. The government aims to achieve this by expanding targeted cash transfers and increasing resources to health and education, the IMF said.
More is needed: While the IMF praised the government’s expansion of the Takaful and Karama cash transfer program to reach 5.2 mn households, it has emphasized the need for further enhancement, especially amid rising poverty risks from recent economic shocks. Takaful and Karama’s total spending is set to increase to 0.4% of GDP this fiscal year, the fund noted.
