Egypt raises fuel prices as economic crisis deepens: oil ministry
In efforts to tackle ongoing economic challenges, Egypt’s oil ministry has made the decision to increase fuel prices starting this Thursday. The rise in prices comes as the country, the Arab world’s most populous nation, grapples with inflation and a shortage of foreign currency reserves.
The Egyptian economy took a heavy blow following Russia’s invasion of Ukraine in February 2022, causing global investors to withdraw billions from the North African nation.
The conflict has caused a sharp rise in wheat prices, significantly impacting Egypt, a key player in global grain imports, and adding strain to its foreign currency reserves.
In under a year, the Egyptian pound has lost half of its value, propelling annual inflation in the import-dependent country to 26.5 percent in January, figures in February showed.
Of the $34.2 billion in Cairo’s foreign reserves – a 20-percent drop from February 2022 – some $28 billion are deposits from wealthy Gulf allies.
The country’s foreign debt has more than tripled in a decade to $155 billion.
A statement late on Wednesday by the oil ministry said it was raising the price of domestic fuel due to “market volatility”, including the exchange rate of the Egyptian pound.
The country’s Petroleum Products Pricing Committee said the price per litre of 80-octane fuel would increase to 8.75 pounds ($0.28) from eight pounds previously.
Likewise, the price of one litre of 92-octane petrol rose to 10.25 Egyptian pounds from 9.25 previously, and 11.50 for 95-octane petrol instead of 10.75.
The price of diesel was kept unchanged at 7.25 Egyptian pounds per litre.
Minimum wage
Meanwhile, Egyptian President Abdel Fattah el-Sisi on Thursday announced an increase in minimum wages of up to 15 percent from April, as part of a social package to ease economic hardship in the country.
“I have been closely following the concerns of the people, and I hear every voice,” Sisi said, making the announcement during a visit to the southern Minya province.
Late last year the International Monetary Fund (IMF) approved a $3 billion loan program for Egypt over 46 months, conditioned on “a permanent shift to a flexible exchange rate regime” and a “monetary policy aimed at gradually reducing inflation”.
Egypt also needs to carry out “wide-ranging structural reforms to reduce the state footprint”, the IMF said at the time, with the economy dominated by powerful state and military-led enterprises.
The government also pledged to push with measures to transition away from subsidies on several basic goods, such as fuel – a plan in place since 2016.
Egypt has been dependent on bailouts in recent years, both from the IMF and from Gulf allies.
According to ratings agency Moody’s, Egypt, with a population of 104 million, is one of the five economies most at risk of defaulting on its foreign debt.
