Egypt has announced a significant fuel price hike for the second time in four months, fulfilling an economic reform condition set by the International Monetary Fund (IMF) to unlock further loan instalments.
According to Egypt’s official gazette, petrol prices will increase by up to 15 percent starting Friday. This move comes just days before the IMF is set to review its $8 billion loan program, with the next tranche valued at $820 million.
The Ministry of Petroleum and Mineral Resources confirmed that petrol prices will now range from 12.25 to 15 pounds ($0.25-$0.31) per litre. Diesel prices, widely used across Egypt, will also rise from 10 pounds ($0.21) to 11.50 pounds ($0.24) per litre.
These price adjustments are part of Egypt’s agreement with the IMF to gradually reduce fuel subsidies, which have heavily burdened the national budget. The first round of hikes occurred in March, aligning domestic prices more closely with international levels. The government aims to completely remove fuel subsidies by the end of 2025, as stated by government spokesperson Mohamed el-Homossan.
Egypt is grappling with its most severe economic crisis in over a decade, Energy News Africa report says. The crisis, marked by ballooning foreign debt and soaring inflation, has led to multiple devaluations of the local currency. Inflation peaked at nearly 40 percent last year before decreasing to 27.5 percent in June. Approximately 30 percent of Egyptians currently live in poverty, according to official statistics.
The economic turmoil is compounded by regional conflicts, including wars in neighboring Gaza and Sudan. Additionally, attacks by Yemen’s Iran-aligned Houthis on Red Sea shipping have negatively impacted revenue from Egypt’s Suez Canal, which saw a 23.4 percent drop in the 2023-24 fiscal year compared to the previous year.
The IMF has mandated Egypt to implement comprehensive reforms to stabilize its economy. These include transitioning to a liberal exchange rate regime, cutting government spending, and promoting private investment.
This latest fuel price hike reflects Egypt’s commitment to these reforms, despite the challenges posed by the ongoing economic and regional crises.
