Egypt Increases Fuel Prices, As Part Of Austerity Measures

Taxi drivers chat as they refuel their vehicles at a gas station in Cairo, Egypt. Egypt announced Saturday, June 16, 2018 steep increases in fuel and cooking gas prices as part of the country's economic reforms and austerity measures designed to overhaul the country's ailing economy.

CAIRO (AP) — Egypt announced Saturday steep increases in fuel and cooking gas prices as part of the country's economic reforms and austerity measures designed to overhaul the country's ailing economy.

The new prices went into effect Saturday morning, the Ministry of Oil said in a statement. Prices for cooking gas increased from 60 to 100 pounds (from $3.30 to $5.60) per cylinder for commercial use, a more than 60-percent increase. The price for home use rose from 30 to 50 pounds ($1.68 to $2.80) per cylinder.

Ninety-two octane gasoline increased from 5 pounds to 6.75 pounds (from 28 cents to 38 cents) per liter, or about a 34-percent increase. Eighty octane gas increased from 3.65 to 5.5 pounds (from 20 cents to 31 cents) per liter, nearly a 50 percent increase.

Ninety-five octane gasoline increased from 6.6 pounds to 7.75 pounds (from 37 cetns to 43 cents), or nearly 17.5 percent. The authorities also raised transportation fares by up to 20 percent on Saturday, according to state-run news agency MENA.

This is the third time the government has increased fuel prices since austerity measures were announced late 2015. The move is likely to send prices soaring further. The new hikes will save up to 50 billion pounds ($2.8 billion) from funds allocated for state subsidies in the country's 2018-19 budget, Oil Minister Tarek el-Molla said.

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 $80 per barrel.

The authorities made the increases as Egyptians have been celebrating Eid al-Fitr, the holiday that comes at the end of the holy month of Ramadan. They likely fear the hikes could cause protests similar to when dozens of people demonstrated against an increase in fares for the Cairo metro in May.

Citizens took to social media to protest the price hikes; authorities banned all unauthorized demonstrations nearly five years ago. Opposition legislator Haitham el-Harirri said slashing fuel subsidies will be followed by more "heavy" price hikes, especially for food and transportation.

"While I don't oppose the economic reforms, they could be implemented gradually and in a better way to avoid the disastrous impact on poor people," he told The Associated Press. In recent weeks, authorities raised metro fares by up to 250 percent, drinking water by up to 45 percent and electricity by 26 percent.

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. The measures were aimed at qualifying for a three-year $12 billion bailout loan from the International Monetary Fund, which Egypt secured in 2016.

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. Egypt's President Abdel-Fattah el-Sissi, the architect of the economic reforms — which none of his predecessors dared implement — defended his government's decision to slash subsidies.

He said that the government spends some $18.6 billion a year on subsidies to cover fuel, food and electricity. Each family receives an average of about $60, he said. Egypt's economy is still recovering from unrest following the 2011 uprising that toppled longtime ruler Hosni Mubarak.