Fuel subsidies will cost Egypt around $20.3Billion(140Billion Egyptian Pounds) if a reform does not kick in before the end of the fiscal (2012/2013) year, according to the country’s energy minister.
North Africa’s largest economy is under pressure to curb its soaring fuel subsidy bill, which accounts for a fifth of state spending, to secure a $4.8 billion loan from the International Monetary Fund.
Osama Kamal says that the previous estimate of $17.4 Billion(120Billion Egyptian Pounds) in the 2012/13 fiscal year to June 30, has been surpassed. The new year in the country’s fiscal calendar is July 1, 2013.
The subsidy bill was budgeted at $13.8Billion (or 95Billion Egyptian Pounds), in 2011/2012. It was an increase of 40% over the previous year’s (2010/2011) budget of $10Billion(or 68Billion Egyptian Pounds).
The state supplies around 42.5 million litres of diesel a day but long lines at filling stations suggest that demand is still not being met.
The government has said it will start rationing state-subsidised motor fuel on July 1, the first day of the new financial year. But the minister expressed the view, in the media, that this could be pushed back, saying he had come up with three scenarios that would be presented to parliament and which may delay rationing until later in the financial year.