The Egyptian government has implemented fuel price increases, exacerbating inflationary pressures for the population. The new prices were announced on the Cabinet’s official Facebook page and took effect on Friday. Diesel, the primary fuel for transportation, rose from 8.5 Egyptian pounds to 10 pounds per litre. Additionally, 95 octane gasoline increased to 13.5 Egyptian pounds per litre from 12.5 pounds. These hikes are attributed to the rising costs of energy imports due to currency depreciation and global energy price surges following Red Sea turmoil.
Egypt’s central bank recently shifted to a market-based exchange rate, causing fluctuations in the local currency. The official rate dropped significantly against the U.S. dollar before partially recovering due to increased foreign currency inflows to the banking sector.
Moreover, the government raised the price of butane gas cylinders from 75 Egyptian pounds to 100 pounds. Egypt’s fuel price adjustments are anticipated to further strain consumer purchasing power and inflate inflation rates, which have already seen a significant rise. These measures align with conditions set by the International Monetary Fund (IMF) for additional loans to Egypt. Recently, Egypt secured a $8 billion bailout from the IMF, doubling the initial amount after negotiations.
The IMF has consistently advised Egypt to devalue its currency and implement fiscal policies, including subsidy cuts. Egypt’s economy faces multiple challenges, including government austerity, the COVID-19 pandemic, repercussions from geopolitical events, and disruptions in Suez Canal revenues due to Houthi attacks on shipping routes in the Red Sea. In response, the United Arab Emirates announced a $35 billion investment project along Egypt’s Mediterranean coast, providing economic support.
