Egypt cuts spending on energy subsidies by a third in new budget

Egypt has slashed spending on energy subsidies by almost a third in its budget for 2014-15 in an effort to reduce a deficit that reached an estimated 12 per cent of gross domestic product in the last fiscal year, following three years of political upheaval.

Hany Kadri, finance minister, said the allocation for fuel subsidies has been cut from around E£144bn ($20bn) last year to E£100bn in the new budget.

Successive Egyptian administrations have balked at increasing energy prices to consumers for fear of provoking a backlash in a country with high poverty levels and a moribund economy. Budgeted cuts last year were not implemented.

If applied this time, the subsidy bill would account for around 13 per cent of government spending, down from more than 20 per cent in recent years.

But Mr Kadri said Egypt could no longer afford to continue to defer reforms and would have to squeeze through “a bottleneck” for the economy to reach “the point of take-off”.