Start bracing for the second fuel price hike of the year, which a government source tells us could happen as soon as next month as the Madbouly government works to phase out fuel subsidies by the end of the year.

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The increase shouldn’t be too high, the source said, pointing to cooling inflation, exchange rate stability, and existing short- and medium-term oil import contracts, which are paving the way for reaching cost-recovery levels.

The anticipated hike should line up with the fifth and sixth reviews of the country’s USD 8 bn loan program, which we were told begins later this month with a visit from a team from the IMF.

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.

Despite fuel prices rising three times during the last fiscal year, spending on subsidies exceeded the EGP 154.5 bn allocated in the budget to EGP 155.6 bn, according to a government document seen by EnterpriseAM. The government plans to spend EGP 75 bn on fuel subsidies this fiscal year.

REMEMBER- The government last hiked fuel prices in April, raising them by 11.8-14.8%. Prior to that, officials increased fuel prices in July and October of 2024.

We had an idea this was coming: “[October is] when the government is set to deliver its final fuel price hike, which would take prices to cost-recovery levels,” EFG Hermes previously wrote in a note seen by EnterpriseAM.

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