Egypt is set to raise fuel prices for the second time since the start of a fiscal reform program in 2014, in an effort to curb a ballooning fiscal deficit hours after floating the exchange rate on Thursday, Reuters reported.
At midnight Thursday going into Friday, lowest value Octane 80 will increase by 46.8 percent to LE2.35 per liter from LE1.6, higher value Octane 92 will increase by 34.6 percent to LE3.5 a liter from LE2.6, and Diesel will increase by 30.5 percent to LE2.35 per liter from LE1.8. Gas prices are predicted to rise by 45.5 percent to LE1.6 a liter from LE1.1. Highest value Octane 95 will remain at the same price of LE6.25 per liter, according to the privately owned Al-Shorouk newspaper.
In 2014, Egypt embarked on a plan to introduce a number of fiscal measures, including fuel subsidy cuts that increased prices by up to 78 percent, as well as new taxes to ease a growing budget deficit that hit 12.2 percent in the 2014-15 Fiscal Year. Fuel and food subsidies represent a quarter of Egypt’s state budget.
Earlier on Thursday, Egypt’s Central Bank floated the exchange rate, starting at a guiding rate of 13 pounds to the US dollar.
The government is hoping to secure a US$12 billion loan from the International Monetary Fund, for which several economic measures are a necessary condition. Last month, head of the fund Christine Lagarde said Egypt would have to devalue the pound prior to the final approval of the loan, as well as continue with fuel subsidy cuts.