BREAKING NEWS

Egypt hikes fuel prices in IMF-backed austerity drive

By REUTERS

JUNE 16, 2018 21:01

CAIRO- Egypt has raised gasoline prices by up to 50 percent, the oil ministry said on Saturday, under an IMF reform plan calling for austerity measures that have made life tougher for ordinary Egyptians.

Oil Minister Tarek El Molla said the price rises would help Egypt save up to 50 billion Egyptian pounds ($2.8 billion) in allocations for state subsidies in the 2018-19 state budget.

The price hike, the third since Egypt floated the pound currency in November 2016, is expected to pile more pressure on Egyptian consumers struggling to make ends meet amid high unemployment and rising prices.

The oil ministry said the price for 95 octane gasoline had been increased to 7.75 Egyptian pounds a liter from 6.60 pounds; 92 octane had been raised to 6.75 pounds a liter from 5 pounds and 80 octane had gone up to 5.50 pounds a liter from 3.65 pounds.

The ministry also raised the price for a canister of gas for Egyptian households to 50 pounds from 30, while a bottle of gas for commercial purposes was raised to 100 pounds from 60.

The government, under new Prime Minister Mustafa Madbouly, also announced on Saturday a hike in taxi fares by 10 to 20 percent, according to a cabinet statement.

Prime Minister Mustafa Madbouly said that bread prices would not be affected by a 50.7 percent rise in diesel prices. He said the Ministry of Supply would bear the extra cost for bakeries to ensure that the price of Egypt's main staple remains unchanged.

Subsidized bread is a staple for millions of poor Egyptians and the country’s leaders are always keen to keep supplies flowing for fear of unrest.

But the price rises left many Egyptians angry.

"I pay 40 percent of my income on transportation," said Mohamed Abed Rabbo, an employee in his 40s employed in a local company in al-Qalyubia, north of Cairo. "Since the last price rise, I have been unable to support my wife and daughter without help from my family," he added, his voice rising in anger.

In Minya province, south of Cairo, Iman Salah said that only in Egypt did employees spend half of their salary on transportation and the other half on electricity, water and internet. "What do we need to do?" she wondered. "May God have mercy upon us."

Halfway into a three-year, $12 billion IMF loan program signed in 2016 which is tied to the austerity measures, Egypt hopes painful reforms will lure back investors and kick-start an economy that crashed after its 2011 Arab Spring uprising.

IMF First Deputy Managing Director David Lipton told government officials in May that Egypt would have to deepen reforms and better encourage private sector growth if it wants to cash in on a wave of global expansion.

The IMF-backed austerity program carries risks for President Abdel Fattah al-Sisi, a former army general who was elected for a second term in March.

Sisi, who came to power after the army ousted Islamist President Mohamed Mursi following mass protests against his rule, has overseen a crackdown on vocal critics he sees as trying to derail his reforms.

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