Economic and Fiscal Update

Reforming Fuel Subsidies The current oil price context is an opportunity for the government to remove fuel subsidies with limited short-term social impacts Triple impact on budget Direct subsidies to fuel prices (price stabilization mechanism) Low current oil prices are favorable to a review of subsidies: ▪ Limited immediate impact on consumer spending ■ Consumers are given time to internalize possible fuel price adjustments in the medium term Direct subsidies to SOGARA (Soutien à l'Activité de Raffinage): subsidy for each ton produced and imported Indirect subsidies to SOGARA (custom tax exemption) Reform includes: Removing the price stabilization mechanism for consumer gasoline and fuel in 2015, following the removal of subsidies on industrial gasoline in 2014 Maintaining the price stabilization mechanism on butane and kerosene (important for the poorest) Removing State support to refining activity (Soutien à l'Activité de Raffinage) Liberalizing imports of refined products ■ Creation of an independent regulatory body for the fuel market Sources: Ministry of Economy, Promotion of Investments and Prospective 19

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