Egypt has reduced spending on fuel subsidies by nearly a third in a new budget that aims to cut the country’s budget deficit to 10 per cent of GDP.

The shortfall reached an estimated 12 per cent of GDP last year, as the country’s subsidy bills continued to balloon and instability meant many holidaymakers stayed away, denying the country revenue from tourism.

On 30 June, Finance Minister Hany Kadry Dimian said the country’s fuel bill would be cut from £E144bn ($20bn) last year to £E100bn.

The announcement came one day after the budget was approved by President Abdel Fattah al-Sisi. He had rejected an earlier draft of the budget that aimed to keep the deficit at 12 per cent.

It unclear whether the cuts to subsidies will be enforced. Any increase to the cost of living is likely to prove unpopular with Egyptians struggling to make ends meet amid increasing unemployment.