Barely hours after announcing a hike in gasoline prices in Egypt for the first time this year, President Abdel Fattah el-Sisi announced Thursday a package of measures to ease the economic burden.
Egypt decided to raise gasoline prices early Thursday morning, to be more in line with global levels.
The Egyptian Ministry of Petroleum announced an increase in the prices of fuel and petroleum products in the local market as of Thursday by up to 20% due to the “fluctuation of the exchange rate of the pound”, in light of a crisis of shortage of hard currency and high inflation rates.
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The Egyptian government has partially subsidized the prices of some fuels and has since 2016 been implementing an economic reform program that included the gradual removal of subsidies on petroleum products.
The increase is likely to lead to higher prices of other goods and services across Egypt. However, the price of diesel, the fuel most used to transport people and goods in Egypt, was not affected.
Egypt has suffered from rising prices in recent months, with annual inflation reaching 26.5 percent in January, the highest in five years, according to official figures. Food prices in some urban areas rose to about 48 percent that month.
The Egyptian economy has been hit hard by the coronavirus pandemic and the fallout from the war in Ukraine.
El-Sisi
In the wake of the economic conditions in Egypt, Egyptian President Abdel Fattah al-Sisi said, “I am closely following the concerns of the Egyptian public and listening to all their voices,” directing the government to implement several measures from early April.
El-Sisi’s decisions included increasing the incomes of administrative workers and owners of private cadres starting in April by a minimum of 1,000 pounds (equivalent to $33).
They also included raising the minimum wage for state workers as well as increasing pensions by 15 percent starting in April.
The decisions also included raising the annual income tax exemption limit from EGP 24,000 to EGP 30,000, in addition to increasing the financial categories granted to beneficiaries of Takaful and Karama programs by 25% per month.
The program provides monthly cash support to the poorest families.
El-Sisi explained that the negative effects of the Russian-Ukrainian war were reflected in the global economy as well as in the Egyptian economy. He stressed that the state’s efforts to implement economic reforms since 2016, in addition to the various social protection measures, have contributed “significantly to containing the effects of this global crisis.”
Egypt received a $3 billion bailout loan from the International Monetary Fund in December to curb economic turmoil. In return, President Sisi’s government has committed to various IMF-guided economic reforms, including floating the exchange rate and cutting fuel subsidies.
The agreement with the International Monetary Fund allows for a potential $14 billion in financing for Egypt.
Egypt also recently announced that it would sell stakes in 32 state-owned companies in a bid to attract more private investment.
Egypt’s announcement came shortly after Moody’s downgraded Egypt’s credit rating by one notch from “B3” to “B2” and cited challenges facing the economy such as a difficult borrowing environment and pressure on the government to increase social spending amid rising inflation.
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