EGYPTIAN fuel subsidies will likely climb to 66 billion Egyptian pounds in the current fiscal year to June 30, Oil Minister Sameh Fahmi said on Tuesday. "Ten years ago it was 1.2 billion Egyptian pounds. This year we expect it at 66 billion pounds," Fahmi told the audience at an American Chamber of Commerce in Egypt. The subsidies were 52.7 billion pounds in the previous fiscal year, according to the ministry data carried by Reuters. Meanwhile, Egypt's inflation rate was probably little changed in January, supporting the Central Bank's decision to keep interest rates on hold. Urban inflation, the benchmark rate that the Central Bank monitors, probably accelerated to 13.4 per cent from 13.2 per cent in December, according to the median estimate in a Bloomberg survey of five economists. The Government's statistics agency in Cairo is set to release the data today. “I don't see any evidence of food prices spilling over into other parts of the economy, therefore I don't think that the Central Bank is under pressure to raise interest rates anytime soon,” said Alia Mamdouh, an economist at CI Capital, an Egyptian investment bank. She forecast a rate of 13.4 per cent in January. The Central Bank, which meets to discuss interest rates every six weeks, has kept its benchmark overnight deposit rate at a three-year low of 8.25 per cent for the last three meetings, citing “subdued” inflationary pressures. The bank cut rates six times in 2009 to help the economy through the global financial crisis, which reduced foreign direct investment and hurt Egypt's revenue from tourism and fees from the Suez Canal, a major global shipping route. The bank's next rates meeting is on March 18. Egypt's economy expanded 4.7 per cent in the fiscal year that ended in June, beating the forecasts of the International Monetary Fund. The Government expects the economy to grow about 5 per cent in the current fiscal year. It was expanding at a 7 per cent pace in the three years before the crisis. The economy's recovery has helped Egypt's benchmark EGX30 stock index rise 12 per cent this year, led by phone company Orascom Telecom Holding SAE, whose shares have gained 33 per cent. The prices of food and drinks, which make up more than 45 per cent of the consumer price index, rose 22.3 per cent in 2009, according to the statistics agency. Core inflation, which excludes the prices of fruits and vegetables along with regulated prices, accelerated to 6.85 per cent in December from 6.59 per cent in the previous month.
