Egypt to Reduce Fuel Subsidies to Cost-Recovery Levels by December

Egypt is set to reduce fuel subsidies to cost-recovery levels by December 2025 as part of its ongoing economic reform efforts. The International Monetary Fund (IMF) confirmed that the government's commitment to adjusting fuel prices remains unchanged, following its approval of a USD 1.2 billion disbursement to Egypt under an USD 8 billion reform program.

The country's current account deficit rose to 5.4% of GDP in the 2023/24 fiscal year, ending in June, and is expected to remain high before potentially falling to 3.5% in 2025/26. Rising energy sector challenges and disruptions in the Suez Canal have contributed to the widening trade deficit. Suez Canal revenue declined to USD 931 million in the third quarter of 2024, down from USD 2.40 billion the previous year, as geopolitical tensions forced shipping diversions.

Despite three fuel price hikes in 2023, Egypt continues to spend approximately EGP 10 billion (USD 197 million) on fuel subsidies each month. The Prime Minister stated that petroleum subsidies would no longer strain public finances by year-end but confirmed that diesel would continue receiving partial government support.