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Wednesday, 26 September 2018

Shrugging off rising oil prices, the Finance Ministry shelves its fuel hedging plan

**#3 FinMin shelves fuel hedging plan, shrugging off rising oil prices: The Finance Ministry has officially decided to shelve a plan to hedge against rising oil prices, Minister Mohamed Maait said yesterday. Officials had suggested earlier this month that the program might be shelved if oil prices were to stabilize, and Maait’s remarks come after Brent crude hit a four-year high this week on the back of OPEC’s latest decision against further output increases. Maait agreed that the spike in oil prices will have an impact on the state budget, but shrugged off the need for the fuel hedging program, saying the ministry is “managing the crisis.” A senior government official told us over the weekend that the Finance Ministry is expected to amend targets for Egypt’s FY2018-19 budget deficit to 8.6% of GDP from 8.4% of GDP, partially due to rising oil prices. The government had reportedly signed this month fuel hedging contracts with two international banks, widely believed to be JP Morgan and Citibank.

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