Egypt increases fuel prices as part of austerity measures

The government, under new Prime Minister Mustafa Madbouly, also announced on Saturday a hike in taxi fares by 10 to 20 percent and said new prices will be posted at taxi stands.

Saturday's price hikes were announced as Egypt, a mostly Muslim country of more than 97 million inhabitants, commemorates the Eid al-Fitr feast which marks the end of the fasting month of Ramadan.

Al-Ahram state newspaper said the price of gas canisters used in many households for cooking or heating would rise by 66 percent. The price for home use rose from 30 to 50 pounds ($1.68 to $2.80) per cylinder.

The new fuel subsidy cuts have introduced a 52.7 percent increase on 80 Octane gasoline, 35 percent on 92 Octane gasoline and 19 percent on 95 Octane gasoline. Eighty octane gas increased from 3.65 to 5.5 pounds (from United States dollars 0.20 to USD 0.31) per litre, almost a 50 percent increase.

This is not the first time in the last few years that the country's public transportation fares have increased immediately following fuel price hikes.

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


It follows a decision this week to further cut electricity subsidies and raise average prices by around a quarter as the most populous Arab nation moves forward in a sweeping economic reform programme.

Finance Minister Mohamed Maait said in a separate statement that slashing fuel subsidies was necessary to help bridge the country's general budget deficit as oil prices continue to surge, topping United States dollars 80 per barrel.

Citizens took to social media to protest the price hikes; authorities banned all unauthorized demonstrations almost five years ago. The hikes come as Egypt presses ahead with a broader economic reform program that has included slashing subsidies, imposing a value-added tax and a currency flotation.

Halfway into a three-year, $12 billion International Monetary Fund loan program signed in late 2016 which is tied to the austerity measures, Egypt hopes painful reforms such as tax hikes and subsidy cuts will lure back foreign investors and kickstart an economy that crashed after its 2011 Arab Spring uprising. The tough austerity measures have won praise from economists and business leaders but have come as a heavy blow to poor and middle-class Egyptians.

Following the 2011 unrest associated with the ruling of Hosni Mubarak, Egypt's economy is said to be still recovering as Egypt's President Abdel-Fattah el-Sissi declared that Egypt's spending to cover fuel, food and electricity is measured to be $18.6 billion a year. Each family receives an average of about United States dollars 60, he said.

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