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Egypt lifts subsidies on natural gas, cuts bread subsidies by 13%

The Egyptian government has cancelled subsidies on natural gas and cut bread subsidies by 13 per cent in the new budget of fiscal year 2014/2015, an Egyptian official said yesterday.

In the previous fiscal year, 2013/2014, natural gas subsidies amounted to eight billion Egyptian pounds ($1.12 billion).

"Subsidies on natural gas are no longer in place and its prices have been relaxed," the spokesperson of the Ministry of Finance Ambassador Ayman Qaffas told the state-owned Egypt Now website.

Ibrahim Mahlab's cabinet, appointed by ex-army chief and newly inaugurated President Abdel Fatah Al-Sisi, has reduced subsidies on commercial and domestic gas, and divided it into three categories since April. The government justified the decision saying it would save about 1.1 billion Egyptian pounds (0.15 billion). The price of natural gas used by vehicles has been increased by 175 per cent as part of a new scheme aimed at reducing subsidies on petroleum products.

The government has raised natural gas prices for cement and iron and steel industries by 30-75 per cent. Egypt is working to fully eliminate energy subsidies within three to five years.

Furthermore, the government has reduced bread subsidies by 13 per cent, lowering bread subsidies to 18.5 billion Egyptian pounds ($2.59 billion), down from 21.3 billion ($2.98 billion) in the previous fiscal year.

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