In a bid to end steep energy subsidies that have led to swelling budget deficits, Egypt has raised gasoline prices nationally as of last Friday- by up to 78 percent.
Government spending on such is killing Egypt's economy as food and energy subsidies gobble up as much as 25% of state spending. The cuts come as Egypt's politicians try to revive an economy hampered by three years of political turmoil.
Effective midnight Friday, Egypt was raising prices on 92 octane gasoline from 26 cents per liter (98 cents per gallon) to 36 cents per liter ($1.36/gal). In Egyptian pounds the price was jumping from 1.85 EGP to 2.60 EGP. Also rising was the price of 80 octane gasoline, some 78% to 1.60 EGP per liter (83c/gal).
Khaled Hanafi, Egypt's supplies minister, confirmed the cuts on private television channel Sada al-Balad, saying the state will cancel 90 octane gasoline and the price for 92 octane gasoline would be 2.60 pounds while the price for 95 octane gasoline would rise to 6.25 pounds. He also confirmed that diesel prices would rise to 1.80 pounds. Newly elected president Abdel Fattah al-Sisi has already raised electricity prices in efforts to reform energy subsidies, one of a range of politically sensitive subsidies that also cover transport, food and agriculture.
Many Middle Eastern countries continue to spend a fortune to let their motorists fill up on the cheap, since governments pay global prices for oil, the cheap pump prices are only because governments pay the difference between what they charge motorists and the global price.
Egypt's Finance Minister Hany Kadry Dimian announced deep cuts in energy subsidies in the 2014/15 budget that would save the government 40 billion pounds.