عربي English Türkçe اردو فارسى
Logo
Latest News
Business

Egypt Raises Domestic Fuel Prices by up to 15% before IMF Review

This picture taken on March 20, 2024 shows a view of the Cairo University bridge across the Nile river connecting Cairo (R) with its twin city of Giza (L). (AFP)
This picture taken on March 20, 2024 shows a view of the Cairo University bridge across the Nile river connecting Cairo (R) with its twin city of Giza (L). (AFP)
TT
20
TT

Egypt Raises Domestic Fuel Prices by up to 15% before IMF Review

This picture taken on March 20, 2024 shows a view of the Cairo University bridge across the Nile river connecting Cairo (R) with its twin city of Giza (L). (AFP)
This picture taken on March 20, 2024 shows a view of the Cairo University bridge across the Nile river connecting Cairo (R) with its twin city of Giza (L). (AFP)

Egypt raised the prices of a wide range of fuel products on Thursday, the official gazette said, four days before the International Monetary Fund (IMF) conducts a third review of its expanded $8 billion loan program for the country.

The official gazette, citing the petroleum ministry, said petrol prices increased by up to 15% per litre, with 80 octane rising to 12.25 Egyptian pounds ($0.25), 92 octane to 13.75 pounds and 95 octane to 15 pounds.

Diesel, one of the most commonly used fuels, saw the biggest increase, rising to 11.50 Egyptian pounds ($0.24) from 10 pounds, according to Reuters.

This is the second time the government has raised fuel prices since the IMF expanded its loan program by $5 billion in March. Egypt has committed to slashing fuel subsidies as part of the agreement.

But Egyptians who spoke to Reuters, including taxi driver Sayed Abdo, complained that Thursday's move would mean an automatic increase in prices for daily goods.

"If you ride with me today and usually pay 10 Egyptian pounds, I will ask you for 15, because fuel prices are raised. That's normal, because when I go get food, what I used to buy with 10 Egyptian pounds becomes now for 15," he said.

"We don't know where we're headed with these prices."

On Wednesday, Prime Minister Mostafa Madbouly said prices of petroleum products will gradually increase until the end of 2025, adding that the government could no longer bear the burden of increasing consumption.

Egyptians have also endured blackouts, which Madbouly said had ended at the start of this week, as the country struggled to import sufficient natural gas to tackle the summer heat.

In April, the IMF estimated that Egypt will spend 331 billion Egyptian pounds ($6.85 billion) on fuel subsidies in 2024/25 and 245 billion in 2025/26.

The IMF's approval for the third review of the expanded loan program was originally expected on July 10, but was pushed back to July 29, with the lender attributing the delay to the finalisation of some policy details.

The IMF is expected to disburse $820 million to Egypt after concluding its review.

Most Viewed

 
Business

World Breathes Sigh of Relief as Trump Spares Fed, IMF

US President Donald Trump speaks to members of press onboard Air Force One on a flight to Fiumicino Airport near Rome to attend the funeral of Pope Francis, April 25, 2025. (Reuters)
US President Donald Trump speaks to members of press onboard Air Force One on a flight to Fiumicino Airport near Rome to attend the funeral of Pope Francis, April 25, 2025. (Reuters)
TT
20
TT

World Breathes Sigh of Relief as Trump Spares Fed, IMF

US President Donald Trump speaks to members of press onboard Air Force One on a flight to Fiumicino Airport near Rome to attend the funeral of Pope Francis, April 25, 2025. (Reuters)
US President Donald Trump speaks to members of press onboard Air Force One on a flight to Fiumicino Airport near Rome to attend the funeral of Pope Francis, April 25, 2025. (Reuters)

Global policymakers gathering in Washington this week breathed a collective sigh of relief that the US-centric economic order that prevailed for the past 80 years was not collapsing just yet despite Donald Trump's inward-looking approach.

The Spring Meetings of the International Monetary Fund and the World Bank were dominated by trade talks, which also brought some de-escalatory statements from Washington about its relations with China.

But some deeper questions hovered over central bankers and finance ministers after Trump's attacks on international institutions and the Federal Reserve: can we still count on the US dollar as the world's safe haven and on the two lenders that have supported the international economic system since the end of World War Two?

Conversations with dozens of policymakers from all over the world revealed generalized relief at Trump’s scaling back his threats to fire Fed Chair Jerome Powell, the guardian of the dollar’s international status whom he had previously described as a "major loser".

And many also saw a silver lining in US Treasury Secretary Scott Bessent’s call to reshape the IMF and World Bank according to Trump's priorities because it implied that the United States was not about to pull out of the two lenders that it helped create at the Bretton Woods conference of 1944.

"This week was one of cautious relief," Austria's central bank governor Robert Holzmann said. "There was a turn (in the US administration's stance) but I fret this may not be the last. I keep my reservations."

A politicization of the Fed and, to a lesser extent, the hollowing out of the IMF and World Bank are almost too much to fathom for most officials.

Deprived of a lender of last resort, some $25 trillion of bonds and loans issued abroad would be called into question.

NO ALTERNATIVE

At the heart of policymakers' concerns is that there is no ready alternative to the United States as the world's financial hegemon - a situation that economists know as the Kindleberger Trap after renowned historian Charles Kindleberger.

To be sure, the euro, a distant-second reserve currency, is gaining popularity in light of the European Union's newly found status as an island of relative stability.

But policymakers who spoke to Reuters were adamant that the European single currency was not ready yet to dethrone the dollar and could at best hope to add a little to its 20% share of the world's reserves.

Of the 20 countries that share the euro only Germany has the credit rating and the size that investors demand from a safe haven.

Some other members are highly indebted and prone to bouts of political and financial turmoil - most recently in France last year - which raise lingering questions about the bloc's long-term viability.

And the euro zone's geographical proximity to Russia - particularly the three Baltic countries that were once part of the Soviet Union - cast an even more sinister shadow.

With Japan now too small and China's heavily managed currency in an even worse position, this left no alternative to the dollar system underpinned by the Fed and the two Bretton Woods institutions.

In fact, the IMF and the World Bank could scarcely survive if their largest shareholder, the United States, pulled out, officials said.

"The US is absolutely crucial for multilateral institutions," Polish Finance Minister Andrzej Domanski told Reuters. "We're happy they remain."

Still, few expected to go back to the old status quo and thorny issues were likely to await, such as widespread dependence on US firms for a number of key services from credit cards to satellites.

But some observers argued that the market turmoil of the past few weeks, which saw US bonds, shares and the currency sell off sharply, might have been a shot in the arm as it forced a change of tack by the administration.

"When President Trump talked about firing Jay Powell, the fact that markets reacted so vigorously to that ended up being a disciplining reality just reminding the administration that, if you cross that line, it could have some very severe implications," said Nathan Sheets, global chief economist at Citi.