U.A.E. Says Egypt Subsidy Cut ‘First Step’ in Broader Strategy

The United Arab Emirates, which is backing Egypt with billions of dollars in aid, said its ally’s decision to raise fuel prices is the “first step” in a broader energy strategy to reduce subsidies and the budget deficit.

Sultan Al Jaber, the U.A.E. minister overseeing assistance to Egypt, said the government of President Abdel-Fattah El-Sisi was also seeking to expand “the tax base and the reduction in wasteful expenditure, while protecting spending on social sectors.” The government is planning to introduce value-added taxes before June, he said in an e-mailed answer to questions.

El-Sisi, a former army chief who was elected after leading the ouster of his Islamist predecessor, is struggling to reduce one of the highest budget deficits in the Middle East and revive an economy battered by more than three years of turmoil. He raised the prices of fuel and natural gas by more than 70 percent last year, going a step further than previous governments, which had shied away from tackling subsidies to avoid a public backlash.