Government will not allow exploitation of citizens: PM
CAIRO: Egypt on Thursday hiked fuel prices by up to 50 percent to help meet terms of a $12 billion International Monetary Fund (IMF) loan deal.
Fuel price increases had been widely anticipated as part of Egypt’s loan accord with the IMF and Thursday’s measures were the second rise since the government floated the pound currency in November.
Government officials say spending cuts will help revive an economy where subsidies have accounted for about a quarter of state expenditures.
Prime Minister Sherif Ismail told reporters after the announcement that officials would monitor market prices, adding: “We will not allow any greed and exploitation of our citizens.”
Petroleum Minister Tarek El-Molla told Reuters the price of 92-octane gasoline had been put up by more than 40 percent to 5 Egyptian pounds ($0.28) from 3.5 pounds per liter. Diesel and 80-octane — the most commonly used fuel categories — rose more than 50 percent to 3.65 pounds per liter from 2.35 pounds.
The government also increased the price of cooking gas cylinders by 100 percent to 30 pounds from 15 pounds per cylinder.
El-Molla said the total subsidies for petroleum products in 2017-2018 would fall to 110 billion pounds ($6.09 billion) from 145 billion pounds ($8.02 billion).
Last year, the government embarked on an ambitious reform program to revive the economy that includes lifting subsidies, raising taxes and loosening capital controls as part of a three-year IMF agreement.
Egypt has been struggling since a 2011 uprising drove foreign investors and tourists away, and many Egyptians have been hit hard by record inflation and a local currency that has lost half its value since it was floated in November.
“It is very wrong timing. People cannot take it anymore, all prices will increase,” taxi driver Ehab Labib said in Cairo. “I will sell this taxi, what else am I going to do?”
Government officials say shortterm austerity under the IMF plan will free up more financing for infrastructure and help draw foreign investment to help create jobs and economic growth.
Egypt is expected to receive $1.25 billion as the second installment of the IMF loan within the coming few weeks. The central bank floated the pound last November as part of reforms agreed with the IMF. At that time, the government increased fuel prices by as much as 46 percent.
“The fuel prices hike was expected in line with the government’s economic program and the IMF deal. It will directly affect the middleand low-income classes, we will see a second wave of inflation,” Reham El-Desouki, an economist at Arqaam Capital, told Reuters.