Risky move: Egypt raises fuel prices to slash subsidies

State spends more than 30% of its budget on fuel and food subsidies.

Afp July 07, 2014

CAIRO: Egypt’s government drastically raised fuel prices late Friday to tackle a bloated subsidy system, in a potentially unpopular move that could present newly-elected President Abdel Fattah al-Sisi with his first serious challenge. With an economy battered by three years of unrest, successive governments had said that the subsidies which allow Egyptians to buy gasoline at some of the world’s cheapest prices must be lifted. The government decree raised the price of 92 octane gasoline, which sold at £1.85 ($0.36) a litre, to £2.6 pounds. The price of diesel was raised from £1.1 pounds to £1.8 per litre, the agency reported. The price increase took effect on Saturday morning, the state-owned Al-Ahram newspaper reported on its website. The state spends more than 30% of its budget on fuel and food subsidies, in a country were nearly 40% of the population – some 34 million people – hover around the poverty line.

Published in The Express Tribune, July 6th, 2014.

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