Egypt to cut fuel subsidies by over 40 pct to limit deficit

Egypt is to cut fuel subsidies in the new fiscal year 2016/2017 by over 40 percent to limit the country's budget deficit, the finance minister said on Saturday.

"The subsidies for petroleum material in the new budget for the 2016/2017 fiscal year has reached 35 billion Egyptian pounds (about four billion U.S. dollars) compared to 60 billion pounds (about 6.75 billion dollars) in the current fiscal year," Finance Minister Amr al-Garhy explained.

Garhy added that social justice is "a main goal" that his ministry seeks to achieve through a number of procedures, and cutting fuel subsidies is one of them.

In mid-2014, the Egyptian government made a similar move that angered many consumers as it raised fuel prices up to 78 percent and slashed natural gas subsidies of several industries, leading to price hikes in those fields ranging from 30 to 70 percent.

Over the past five years, Egypt has been suffering economic recession due to political turmoil that reduced the country's foreign currency reserves from 36 billion U.S. dollars in 2011 to 16.5 billion dollars as of end of March 2016.

The newly-reshuffled government of Prime Minister Sherif Ismail is currently struggling to reduce an ongoing budget deficit of about 36 billion dollars.

The finance minister expected the budget deficit to reach 11.5 percent of the GDP in the current fiscal year, targeting to reduce it to 9.8 percent.

"Getting a loan from the International Monetary Fund has not been decided yet," the minister said, noting the government has already set up a reform program to face the deficit regardless of any loans. Endit