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  • Updated: March 22, 2024

IMF loan: Alarm as Egypt hikes fuel prices amid economic crunch

IMF loan: Alarm as Egypt hikes fuel prices amid economic cru

The Egyptian government's plan to raise fuel prices today has sparked alarm among civilians, emphasising the country's economic woes.

The move is part of Egypt's $3 billion financial arrangement with the International Monetary Fund (IMF) and aims to align domestic fuel pricing with global market rates.

Egypt's commitment to progressively raise fuel prices, first made in November 2022, was intended to address a slowness in adjustments seen over the previous year. Despite this commitment, only one adjustment was made in March 2023.

According to Reuters, the petroleum ministry revealed the latest modifications in the official gazette. The quarterly pricing committee hiked petrol prices by 1 Egyptian pound ($0.02) per litre, bringing 80 octane to 11.00 pounds, 92 octane to 12.50 pounds, and 95 octane to 13.50 pounds. Additionally, diesel prices increased to 10.00 pounds from 8.25 pounds, while butane cooking gas prices increased to 100 pounds per cylinder from 75 pounds.

While the government claims that subsidised gas prices primarily benefit the wealthy, the IMF emphasises the necessity of market-based pricing in addressing economic imbalances.

The latest increase of the IMF's financial support agreement to $8 billion highlights Egypt's attempts to confront economic issues aggravated by the Gaza War and currency depreciation. With inflation reaching 33.7% in 2023, the economic hardship on Egyptians is apparent.

However, Egypt's earlier pledges under the IMF accord lapsed due to unmet requirements such as currency market liberalisation and reduced government economic interference. Egypt, with around 60% of the population living near or below the poverty line, is experiencing persistent economic instability, prompting aid and stimulus packages from institutions such as the European Union, the World Bank, and the UAE.

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