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22-11-12

Egypt's cabinet approves cutting 95-octane subsidy

(MENAFN) Egypt's cabinet has agreed to cut subsidies on 95-octane gasoline and is planning to set quotas for the sale of other subsidised fuel from April, Reuters reported. The decision comes shortly after the Egyptian government had reached a preliminary deal with the International Monetary Fund (IMF) for a USD4.8 billion aid. Planning and International Cooperation Minister Ashraf Al Araby said 95-octane fuel, the highest grade available, would be sold at "real cost" and this would go into effect within days. He added that there would be a consultation with the public on how to work out a quota system. The IMF deal included an agreement to rein in wasteful spending on hefty fuel subsidies, which raised worries among the ordinary Egyptians that the deal will mean tough austerity measures, so the cabinet's decision to cut 95-octane subsidy will test the public response. Economists say the terms are not onerous and the government insists steps will still protect the poor. Prime Minister Hisham Kandil said earlier this week that curbing the subsidy on 95-octane fuel would save the state USD9.01 million a year. He added that setting quotas for other subsidised fuel, operated by a system of smart cards, would allow drivers enough fuel to get to and from work, but not other journeys such as holidays. The prime minister said the quota for each driver or vehicle still had to be worked out to ensure it was fair and did not hurt the poor, who often drove older, less efficient cars.

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