08:00 pm
Tuesday, January 10, 2023
Books – Mustafa Eid:
The Egyptian government has pledged to continuously implement the automatic pricing mechanism for petroleum products, reflecting the movements of international oil prices in domestic fuel prices, as part of the cooperation program with the International Monetary Fund for economic reform, which was agreed upon recently.
According to a report by the fund on the details of the agreement, issued today, Tuesday, the government said that it will refrain from reducing fuel prices until the fuel subsidy for products covered by the mechanism (that is, all products except butane gas and fuel for bakeries) in the previous fiscal year is canceled.
The government kept the prices of petroleum products low during the past year compared to what they are supposed to be in the case of applying the cost increase in the two factors of applying the pricing mechanism, whether international oil prices or the exchange rate of the dollar against the pound, which witnessed a significant increase, according to what the fund indicated.
The IMF expects fuel subsidies to reach 97 billion pounds during the current fiscal year, compared to 60 billion pounds, an increase of 61.7%, provided that it will remain relatively stable during the following years around the level of 100 billion pounds.
The government stated that implementing a pricing mechanism that reflects international prices will help consolidate the progress made in fuel subsidy reform in recent years, protect valuable budget resources, and assist the government’s decarbonization efforts.
“The savings from this measure help us redirect resources to targeted support that is significantly more efficient at protecting those in need.”
She added, “We will enhance communication around the mechanism by explaining the rationale for pricing decisions. Our financial accounts will record the full scope of any fuel subsidies and any liabilities to the General Petroleum Corporation will be published as part of the annual report on payment arrears.”
The government indicated that to help mitigate the impact of higher fuel prices on vulnerable groups, targeted support will be strengthened through existing social programs such as solidarity, dignity and ration cards.
She said, “We also expect that Parliament will soon approve an amendment to the income tax law that increases the personal income tax exemption threshold providing relief to the middle-income population from general increases in the prices of goods and services. With the same goal, we are developing additional measures to support families, within the limits of available budget space.