Egypt raises fuel prices to lock in IMF loan tranche | Business and Economy News

Petrol will cost up to 15 percent more from Friday.

Egypt is raising fuel prices for the second time in four months, fulfilling an economic reform condition set by the International Monetary Fund (IMF) to unlock hundreds of millions in new loans.

Egypt’s official gazette reported an up to 15 percent price hike for petrol on Thursday, four days before the IMF is to review its $8bn loan programme, the next tranche of which is $820m.

The new prices will take effect on Friday, said Egypt’s Ministry of Petroleum and Mineral Resources.

Petrol prices jumped about 15 percent and will now range from 12.25-15 pounds ($0.25-$0.31) per litre.

The decision will also make diesel, one of Egypt’s most commonly used fuels, costlier, taking its price from 10 Egyptian pounds ($0.21) to 11.50 pounds ($0.24).

Lifting fuel subsidies

As part of its IMF bailout deal, Egypt agreed to gradually slash fuel subsidies, which take up a chunk of its cash-strapped budget.

Egypt introduced an initial round of price hikes in March to bring domestic prices somewhat in line with those in international markets. It aims to fully remove fuel subsidies by the end of 2025, according to government spokesperson Mohamed el-Homossan.

The move comes as Egypt battles its worst economic crisis in more than a decade, with ballooning foreign debt driving up inflation and causing several consecutive devaluations of the local currency.

Inflation peaked at nearly 40 percent last year, before winding down to 27.5 percent in June.

Nearly 30 percent of Egyptians live in poverty, according to official figures.

Alongside the economic crisis, Egypt has also been caught in regional tensions, with bloody wars raging in neighbouring Gaza and Sudan.

Attacks by Yemen’s Iran-aligned Houthis on shipping around the Red Sea have also hit revenues from Egypt’s Suez Canal, recording a 23.4 percent drop in the 2023-24 fiscal year compared with the previous one.

The IMF has demanded Egypt implement wide-ranging reforms to reset its economy, including shifting to a liberal exchange regime, reducing government spending and incentivising private investment.