CAIRO: The decline in global oil prices will reduce Egypt's fuel subsidy bill to around 55 billion Egyptian pounds ($7 bln) in 2015/16, Egypt's Petroleum Minister Tarek El Molla told reporters on Monday.
Egypt, which has been facing an energy shortage, had earmarked around 61 billion pounds in its 2015/16 budget for fuel product subsidies.
Fuel subsidies have long weighed on the state's budget and contributed to economic stagnation, which President Abdel Fattah al-Sisi promised to tackle when he took office in 2014.
The government cut fuel subsidies in the summer of 2014, raising prices by up to 78 percent, in a move lauded by economists but criticized by some Egyptians accustomed to cheap energy.
The government had forecast a budget deficit of 8.9 percent of gross domestic product for 2015/16, assuming the previous estimate of 61 billion pounds for fuel subsidies.
Egypt, which used to be a net energy exporter had turned into a net importer over the past few years due to the heavy burden of subsidies compounded by falling production.
Gulf states have helped Egypt through its energy shortage. In December Saudi Arabia's King Salman ordered the kingdom to help meet Egypt's petroleum needs for the next five years.
An Egyptian petroleum official told Reuters on Monday that Saudi Arabia had pledged to meet Egypt's petroleum needs with payment facilities and interest rates up to 1 percent for three months, starting from February.
Oil prices have slumped over the past 18 months to 12-year lows on a supply glut and slowing demand, particularly in China.
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