In its third review under the extended arrangement in accordance with the Extended Fund Facility issued in July 2018, the International Monetary Fund (IMF) assured that the ongoing energy subsidy reform continues to play a key role in fiscal consolidation.
It clarified that the fuel subsidy bill has decreased from 3.3% of the GDP in the fiscal year (FY) 2016/17 to a projected 2.7% of the GDP in FY 2017/18, expecting to be declined further to 1.8% of the GDP in FY 2018/19, despite the significant increase in world oil prices over the past year.
Even with the significant increases since the start of the programme, prices for fuel products in Egypt remain among the lowest in the world, which benefits the well-off disproportionately rather than the poor. In June 2018, the authorities increased fuel prices by another 44 % on average, which raised the pre-tax price-to-cost ratios to about 73% for gasoline, diesel, kerosene, and fuel oil.
