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Egypt raises fuel prices to push for economic recovery

Egypt increased petrol prices on June 16, 2018 between 35-50 percent as part of austerity measures tied to an IMF loan
KHALED DESOUKI (AFP)

Egypt on Saturday announced new hikes on fuel prices as part of austerity measures tied to an IMF loan as it seeks to cut subsidies and reduce its public debt.

The price hikes of between 35 and 50 percent were announced by Oil Minister Tarek el-Molla and go into effect immediately, state media reported.

It follows a decision this week to further cut electricity subsidies and raise average prices by around a quarter as the most populous Arab nation moves forward in a sweeping economic reform program.

Egypt has imposed harsh austerity measures and started phasing out subsidies on many goods and services since November 2016, when the International Monetary Fund approved a three-year $12 billion loan.

Since then consumer prices have soared as the authorities floated Egypt's currency and adopted a value-added tax.

Egypt's fiscal crisis saw its deficit balloon to 12.5 percent of GDP in the 2015-2016 tax year.

The latest price hikes see the cost of widely-used 92 octane unleaded petrol rise by 35 percent, while diesel shoots up by 50 percent, according to figures published by state-run Al-Akhbar newspaper.

Al-Ahram state newspaper said the price of gas canisters used in many households for cooking or heating would rise by 66 percent.

Molla, quoted by state newspaper Al-Ahram, said the latest price hikes were aimed at "fixing oil subsidies and adjusting price distortions".

He said oil subsidies had cost state coffers 517 billion Egyptian pounds (around $29 billion, 25 billion euros) over the past five years.

Saturday's price hikes were announced as Egypt, a mostly Muslim country of more than 97 million inhabitants, commemorates the Eid al-Fitr feast which marks the end of the fasting month of Ramadan.

Last month, authorities raised the price of metro tickets, triggering protests at metro stations during which security forces detained around 30 people.

Price hikes and a proposed income tax law in Jordan sparked angry but peaceful protests earlier this month that brought down the prime minister.

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