Egypt has raised fuel prices by up to 15% as the country looks to cut state subsidies as part of a new agreement with the International Monetary Fund (IMF).
The oil ministry announced increases across a variety of fuel products, including gasoline, diesel, and kerosene.
However, fuel oil used for electricity and food-related industries will remain unaffected to protect essential services.
This decision comes after a pricing committee’s quarterly review, reflecting Egypt’s commitment to align with its financial obligations under the IMF pact.
Egypt is in the midst of recalibrating its economy following a massive $57 billion bailout, orchestrated with the IMF and the United Arab Emirates.
The IMF, which has expanded its support to $8 billion, emphasizes the need for Egypt to replace untargeted fuel subsidies with more focused social spending.
This is seen as a crucial component of a sustainable fiscal strategy aimed at stabilizing the nation’s finances.
Effective immediately, the cost of diesel will increase to 11.5 Egyptian pounds per liter from 10.
Gasoline prices have also risen, with 95, 92, and 80-octane types now costing 15, 13.75, and 12.25 pounds per liter, respectively.
Despite the hikes, Egypt’s fuel prices remain among the lowest globally, trailing only behind nations like Iran and Libya.
The latest increase follows recent adjustments to the price of subsidized bread, another key staple for Egyptians, underscoring the government’s resolve to navigate its economic crisis through tough reforms.
While the rise in fuel costs is expected to impact millions, analysts suggest the inflationary effects might be moderate.
EFG Hermes noted that the gradual removal of subsidies and a potential hike in power tariffs could have a relatively limited impact on overall consumer prices.
They predict that the deceleration in inflation will persist throughout the year.
Egypt’s efforts to manage inflation have shown progress, with headline inflation slowing for the fourth consecutive month in June.
This trend offers a glimmer of hope for the government as it strives to balance economic stability with social welfare.
The IMF and Egyptian officials are scheduled to meet on July 29 for a third review of the loan program. Approval from the IMF board could unlock an additional $820 million tranche, further supporting Egypt’s economic restructuring.
