Egypt launches first phase of plan to cut fuel subsidies

Published June 3rd, 2013 - 05:22 GMT

Egypt has begun implementing the first phase of a project to distribute petrol from depots to gas stations using smart cards as part of a plan to restructure the energy subsidies which use up around one fifth of the country's budget, the Middle East News Agency reported.

The Egyptian General Petroleum Corporation has started electronic linking between “Mastard” depot and several gas stations in Cairo and Giza.

Restructuring energy subsidies is a major step if Egypt wants to reach an agreement on a $4.8 billion loan from the International Monetary Fund (IMF).

Egypt has been in talks with the IMF for about a year to secure a loan which the government believes is essential to help the country's ailing economy.

Egypt's economy has slowed down due to a decline in tourism and foreign investments that accompanied political turmoil triggered by the 2011 uprising which toppled Hosni Mubarak.

The IMF has asked Egypt to decrease the energy subsidy which may exceed 120 billion EGP in the 2012-2013 fiscal year and to increase taxes.

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