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Sunday, 6 November 2016

The Egyptian economy is running on empty as it awaits a recharge of energy strategy | The National

The Egyptian economy is running on empty as it awaits a recharge of energy strategy | The National:

"Long queues stretched around Cairo petrol stations on Thursday evening as motorists rushed to beat rising fuel prices. In tandem with the sharp devaluation of the Egyptian pound, the government has cut subsidies again. But with the country’s indicators blinking on zero, Egypt badly needs to recharge its energy strategy.

The Egyptian pound fell by almost a third as the central bank said on Thursday that it was letting the currency float. Devaluation had become inevitable as a requirement for securing an essential IMF loan and easing a drought of foreign currency that had led to shortages of sugar.


Problems with energy have been an important part of undermining Egypt’s budget and trade balance. Even after cuts earlier this year, subsidies account for nearly half the forecast budget deficit of 9.8 per cent for the 2016-17 fiscal year. The drop in subsidies was mostly because of falling global oil and gas prices, not internal reforms. The price of gas has gone up, but electricity tariffs have not been raised proportionately, shifting the subsidy burden rather than removing it."



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