File Photo: An Egyptian worker waits for a customer at a petrol station in Cairo. AFP
In a statement by the ministry, Minister of Finance Ahmed Kouchouk said the move reflects ongoing efforts to rationalize energy spending, improve efficiency, and redirect resources while safeguarding the availability of key commodities and sustaining economic activity.
He noted that the government continues to hedge around 50 percent of its annual petroleum product needs, adding that authorities are studying expanding this approach to mitigate global price volatility.
The minister said the new allocations will support efforts to enhance energy efficiency, expand renewable energy capacity, and upgrade transmission and distribution networks, alongside continued investment in strategic projects, including the El-Dabaa Nuclear Power Plant (NPP).
Under Egypt’s Extended Fund Facility (EFF) $8 billion loan programme with the International Monetary Fund (IMF), energy subsidy reform has been a central pillar of fiscal consolidation efforts, with authorities seeking to curb inefficient spending and redirect resources toward more targeted social support.
The EFF programme is scheduled to conclude by the end of 2026, with two remaining reviews to be completed on 15 September and 15 December. An Egyptian high-level delegation is expected to head to Washington, D.C. this week to hold discussions on the remaining reviews during the IMF/World Bank Group Spring Meetings scheduled for 13–18 April.
While subsidies are designed to keep prices low for consumers, they impose a heavy fiscal burden and are often poorly targeted, disproportionately benefiting higher-income groups rather than the most vulnerable, according to the programme. Broad-based subsidies also strain public finances, either through higher borrowing and taxes or reduced spending in other priority areas, while distorting resource allocation, constraining economic growth, and damaging the environment through increased pollution.
According to the EFF framework, phasing out fossil fuel subsidies would also help reduce exposure to volatile global energy markets and improve energy security.
Energy subsidies in Egypt have risen in recent years as domestic retail prices failed to keep pace with increasing production costs. In this context, the programme underscores the importance of gradually and transparently aligning fuel and electricity prices with actual costs to prevent the re-emergence of large, untargeted subsidies.
Such reforms are expected to create fiscal space to expand cash transfer programmes and other forms of targeted support for low-income households, while also encouraging investment in the energy sector to meet rising demand and avoid supply shortages, particularly in electricity.
Kouchouk stressed that the government had responded proactively to recent exceptional challenges, a stance he said had been positively received by international institutions, credit rating agencies, and investors.
He added that Egypt remains committed to its economic reform programme aimed at boosting investment, production, exports, and growth, while increasing private sector participation.
As part of these efforts, the government is targeting three public offerings before the end of the current fiscal year and is preparing more than 20 new projects under public-private partnership (PPP) schemes to attract further investment inflows.
The minister also highlighted coordination with the irrigation and agriculture ministries on a new initiative to optimize water use and deploy modern technologies, alongside plans to transition government entities towards more efficient transport systems.
Energy subsidies in the current FY2025/2026 budget total around EGP 150 billion, split between EGP 75.033 billion for petroleum products and EGP 75 billion for electricity, according to the finance ministry.
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