Egypt’s government is working on a programme to cut the country's energy subsidy bill by 50 per cent over the coming five years and to compensate by raising Egyptian wages, the state-run MENA news agency reported Saturday.

According to the Egyptian minister of petroleum, Osama Kamal, the government has spent LE55 billion ($8.1 billion) in the first half of the current fiscal year 2012/13 for the energy subsidy bill and it is expected that the full-year bill will amount to LE110 billion ($16.3 billion).

In November 2012, the Cabinet approved cutting subsidies from high-end 95-octane gasoline.

Last month, the government expected reductions of two per cent in the state’s expenditures from LE594.8 ($93 billion) to LE583.8 billion ($91.3 billion) in 2012/13 due to austerity measures, which will see the total subsidy bill drop by LE10 billion to LE182.8 billion ($28.6 billion).

The decline in spending will mostly affect energy.

The government announced in the 2012/2013 budget a cut of subsidies for energy to LE70 billion ($10.4 billion). Many experts estimate that the government goal is too optimistic. Last year, subsidies were set to reach some LE95 billion ($14.1 billion) in the budget, but are estimated to have actually reached LE115 billion ($17.1 billion).

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