Egypt will begin using smart cards in the next few weeks to distribute gasoline and diesel, Oil Minister Sherif Haddara said, in a step towards meeting IMF terms for a loan.

The first smart cards will go to fuel stations and then the programme will widen to include all car owners.

The government is turning to smart cards to reduce the amount of money it spends on subsidised energy products, which eat up a fifth of all state spending.

The International Monetary Fund is asking Egypt to act to reduce its budget deficit in return for a $4.8 billion loan.

Egypt now sells many of its energy products at prices substantially below the cost of production.

The government will issue cards to tanker trucks and 2,870 gasoline stations in June to regulate the distribution of fuel.

This will help the distributors get used to smart cards and work smoothly with the public when the scheme is extended to all car owners, Haddara told a news conference.

Car owners throughout the country will get the cards in July and August. Any fuel sold outside the smart card system will be sold at cost and not at the free market price, he said.

He did not say when the government will actually start selling fuel through the cards.

The government has repeatedly postponed implementation of the smart card system, wary of taking austerity measures before a parliamentary election expected for later this year.

Facing a budget and currency crisis, Egypt has been struggling to pay for food and fuel imports. Last month it received $5 billion in financial support from Qatar and Libya.-Reuters