Egypt: Transitioning Away from Subsidizing Fossil Fuels

This case study examines Egypt's 2014 reform of its fossil fuel subsidies, which aimed to reduce a significant budget deficit and reallocate funds toward social protections and economic growth. While the reforms successfully reduced government spending and were supported by a broad political consensus, the document notes challenges in targeting support to the poorest households and aligning reforms with long-term climate goals.

• In 2014, Egypt implemented wide-ranging reforms to its fossil fuel subsidies, increasing the prices of gasoline by 78%, diesel by 64%, and kerosene by 64%. These reforms were driven by the fact that fuel subsidies consumed over 20% of the 2013 budget, totaling $21 billion, which represented 6% of Egypt's GDP.
• The pre-reform subsidy system disproportionately benefited wealthier citizens. The wealthiest 20% of households received 46% of the total subsidy benefits in absolute terms, while the poorest 20% received only 9%. In urban areas, the wealthiest 20% received eight times more subsidies than the poorest 20%.
• To mitigate the impact of higher fuel prices on low-income families, the Egyptian government introduced several social protection measures. These included expanding the food subsidy program to 20 new products in June 2014, increasing the public-sector minimum wage via stimulus packages in August 2013 and January 2015, and expanding social security pensions in the 2014-2015 budget to cover 2.3 million families.
• The reforms led to immediate fiscal relief, with energy subsidy spending dropping by 29% to $3.1 billion in the first quarter of the 2014-2015 fiscal year. However, the government struggled to target support to the poorest households due to the lack of a unified household registry and the absence of an electronic smart card system.

APA

World Resources Institute (2021). Egypt: Transitioning Away from Subsidizing Fossil Fuels. https://www.wri.org/snapshots/egypt-transitioning-away-subsidizing-fossil-fuels

Chicago

World Resources Institute. Egypt: Transitioning Away from Subsidizing Fossil Fuels. 2021. https://www.wri.org/snapshots/egypt-transitioning-away-subsidizing-fossil-fuels.

Wikipedia

{{cite report |author=World Resources Institute |title=Egypt: Transitioning Away from Subsidizing Fossil Fuels |date=1 April 2021 |url=https://www.wri.org/snapshots/egypt-transitioning-away-subsidizing-fossil-fuels |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{worldresourcesinstitute2021egypt, author = {{World Resources Institute}}, title = {{Egypt: Transitioning Away from Subsidizing Fossil Fuels}}, institution = {World Resources Institute}, year = {2021}, month = apr, url = {https://www.wri.org/snapshots/egypt-transitioning-away-subsidizing-fossil-fuels}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }