The International Monetary Fund said that Egypt is still committed to reducing fuel subsidies to reach the level of cost recovery by the end of this year, as part of its endeavor to reduce the large deficit in the balance of current transactions.
The director of the fund mission in Egypt, Ivana Hollar, told reporters yesterday evening that this commitment made by Egypt in the summer of last year is still unchanged.
She added: “The authorities have committed to the prices of fuel products at the level of cost recovery at the end of December 2025. This commitment has not changed and the most important commitment to reach fuel retail prices to cost recovery levels remain.”
Last Monday, the IMF approved the disbursement of 1.2 billion dollars to Egypt after completing the fourth review of the 8 billion dollars of economic reform program, after reducing the target related to the initial surplus in the budget.
The current transactions balance
The deficit in the balance of current transactions for Egypt increased to 5.4% of GDP in the fiscal year 2023-2024, which ended last June.
“We still expect the deficit in the balance of current transactions to reach a relatively high level this year, before it decreased to about 3.5% of the gross domestic product in the next fiscal year 2025-2026.”
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She added: “One of the factors contributing to the high deficit in the balance of current transactions is not only obstacles (related to navigation) in the Suez Canal, but also the difficult situation in the energy sector that contributes to the high trade deficit.”
The revenues of the Suez Canal, a major source of foreign currency, decreased to $ 931 million in the third quarter of 2024, from $ 2.4 billion in the same period of the previous year, due to the disruption of marine shipping roads after the outbreak of the war in the Gaza Strip.
The Minister of Petroleum Karim Badawi said last October that Egypt is still spending about 10 billion pounds (197 million dollars) on fuel subsidies monthly, despite raising its prices 3 times last year.
Prime Minister Mustafa Madbouly confirmed in comments broadcast on television yesterday, Wednesday, that Egypt is continuing in financial reform, adding that the government cannot sell diesel at cost and will continue its support to some extent. Madbouly stressed that by the end of the year the government will stop fuel support.
