Egypt hikes fuel prices amid soaring inflation in IMF backed reforms

Egypt announced a new sharp increase in fuel prices on Thursday, as it slashes government subsidies in a tough International Monetary Fund (IMF) -backed reform programme.

Fuel prices hiked up to 50 percent a sharper rise than expected for many struggling with extremely high living costs.

The cabinet said that 82 octane petrol would sell for 3.65 Egyptian pounds a litre up from 2.35, with the same increase for diesel, while 92 octane petrol rose from 3.5 to 5.0 Egyptian pounds.

The government also increased the price of cooking gas cylinders – used mostly by poorer Egyptians – by 100 percent to 30 pounds ($1.66) from 15 pounds per cylinder.

Prime Minister Sharif Ismail said the fuel subsidies were straining government financing.

The projection for next year at the same levels “is 150 billion pounds. This is a big number that neither the oil sector nor the budget can handle,” he said in a press conference.

The government plans to provide “less subsidies for fuel and to divert it to other sectors” such as development, he added.

The government first increased fuel prices in 2014 and again in November last year after floating the pound.

In 2015, Egypt embarked on an ambitious reform programme to revive the economy that includes lifting subsidies, raising taxes and loosening capital controls as part of a three-year IMF agreement.

Egypt has to meet the terms of the deal to secure a $12 billion IMF loan deal. It will receive a second installment of $1.25 billion of the loan within the coming few weeks.

The north African country has been struggling since the 2011 uprising 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.