Important economic decisions in 2014/2015 economic plan

In 2012, the Egyptian government undertook many difficult economic decisions, to meet the budget deficit and the sharp increase in domestic debt.

The government reduced energy-oriented support to reach EGP 100.3bn in the new budget of fiscal year (FY) 2014/2015, to reduce expenses and move towards austerity.

Economic scholar at the Carnegie Middle East Center Amr Adly told Daily News Egypt that the government’s decisions were not enough. Instead, he said it should treat the economic crisis by developing a comprehensive economic plan, rather than temporary fiscal and monetary management to save the value of the Egyptian pound.

The most important of these decisions are:

Raising the prices of petroleum products

The government raised the price of a litre of 80 Petrol to EGP 1.60 instead of EGP 0.90, and the price of 92 petroleum to EGP 2.60, instead of EGP 1.85.

The price of a litre of 95 petroleum has been raised to EGP 6.65 instead of EGP 5.65, with the price of diesel raised to EGP 1.80 instead of EGP 1.10.

Subsidies in the current fiscal year’s (FY) budget 2014/2015 for diesel fuel is about EGP 44.9bn, about EGP 20.1bn for gasoline, EGP 19.1bn for butane gas and EGP 16bn for diesel.

The cost of fuel subsidies amounted to EGP 22bn in the first quarter (Q1) of FY 2014-2015, a rate of decrease of 29% from the same quarter in the previous FY 2013/2014, which amounted to EGP 31bn.

Amr Adly said the government had to cut subsidies, as it is the largest cost in the state budget. It has consequently raised oil prices and restructured the petroleum sector in order to accommodate the inflationary impact of the economy.

Raising electricity, gas and water prices