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Egypt slashes fuel subsidies for fifth time

July 5, 2019 at 1:22 pm

Egyptian authorities announced this morning that they have slashed fuel subsidies once again, raising the price of petrol and diesel 22 per cent.

Under the conditions set by a 2016 IMF loan, Egypt promised to reduce fuel subsidies in order to secure $12 billion. Whilst elements within the state media have sought to portray it as necessary to achieve social justice, huge parts of the population disagree.

The austerity measures have hit ordinary Egyptians, who are already reeling under high unemployment and rising prices, hard. Half of the country live below the poverty line and rely on government subsidies, which constitute a quarter of the state’s budget.

Earlier this year the government raised the price of cinema tickets, train fares and metro tickets and in the summer hiked up the price of drinking water. The price of electricity was raised by around 15 per cent in May.

After Egypt floated the Egyptian pound in 2016 its currency has halved against the US dollar and driven inflation above 30 per cent.

READ: Remittances of Egyptians abroad fall by 6%, foreign investment by 22%

The IMF loan was intended to kick-start the economy after it crashed following the 2011 Arab uprising. Since then, terror attacks and Egypt’s dire human rights record have kept tourists away from the country, which has exacerbated the problem as tourism was once a major income for Egypt.

Though President Abdel Fattah Al-Sisi came to power on the promise he would reform the economy, he has come under criticism for failing to do so. An online campaign last year under the hashtag #Sisi_leave called on the general to step down.

In response he has said he needs more time and has asked all Egyptians to make sacrifices to help revive the economy, but his critics point out that the elite are being protected against the austerity drive.

READ: Sisi is afraid of Egypt’s growing opposition, rights advocate says

Earlier in the year it was reported that authorities planned to increase public tax revenues by 131 per cent over the next four years, despite the fact that an earlier law allowed the salaries of senior state officials to be raised.

Al-Sisi has regularly increased military pensions since he assumed power, most recently at the end of June when he raised pensions for military personnel and salaries for civil servants by 15 per cent as of 1 July.