Moody’s welcomed the cuts to fuel subsidies, but warms of potential for “reform fatigue”: The ratings agency said in a statement issued Thursday (paywall) that recent subsidy cuts are credit-positive for Egypt and should reduce the state fuel subsidy bill to 1.7% of GDP in FY2018-19 from 2.5% of GDP in the current fiscal year. The hikes will help reduce the overall subsidy bill to 6.5% of GDP in the fiscal year starting 1 July, from 7.5% this year. Without the decision, the government’s fiscal consolidation targets for next year would have been in jeopardy. “The authorities plan to eliminate all fuel subsidies (excluding liquefied natural gas) by the end of 2019 as per the government’s reform program agreed to with the IMF,” says the report. The fuel price hikes would help Egypt meet its target to reduce the budget deficit to 8.4% of GDP in FY 2018-19, from around 9.8% in FY 2017-18. The report warned that “reform fatigue” could set in and so signals political risk as one of the biggest risk factors in Egypt.