A government source said that allocations earmarked for petroleum product subsidies are expected to exceed the previous amount of EGP 35bn.
The market cautiously awaits the new prices of petroleum products after cutting down on petroleum subsidies, which was a condition set by the International Monetary Fund (IMF) to approve a $12b loan.
The petroleum industry is awaiting news of the rate of the increase to allocations after the Central Bank of Egypt (CBE) allowed the Egyptian pound to float at EGP 13 against the US dollar, which would result into inflating the quantity of funds the industry receives.
The government lowered its allocation for petroleum subsidies to EGP 35bn for the fiscal year 2015/2016, compared to EGP 55bn the previous year.
The government estimated the subsidies for petroleum products at EGP 35bn based on a price of $40 per oil barrel. However, the international price jumped to $50.
Moreover, the estimated exchange rate in the budget was EGP 9 per US dollar but since the Egyptian pound was further devalued on Thursday the exchange rate rests at EGP 13 per US dollar.
