Egypt slashes fuel subsidy to ease economic pressure

The Egyptian government has slashed fuel subsidies in a bid to ease pressure on public finances.

The development, which took effect on Friday, is part of its three-year economic overhaul backed by the International Monetary Fund (IMF) to curb government spending.

Before the slashing, gasoline, diesel, kerosene and fuel oil were sold at 85-90 percent of their international cost.

The development will raise domestic prices by between 16 percent and 30 percent.

The price of widely used 92 octane grade petrol rose by 18.5 percent while lower quality 80 octane rose by 22.7 percent

Higher grade 95 octane fuel rose by 16.1% to 9 Egyptian pounds ($0.5428) a litre, and diesel rose by 22.7% to 6.75 pounds per litre. The price of cooking gas cylinders rose by 30% to 65 pounds for domestic use and 130 pounds for commercial use.

While it is a relief on the economy, the subsidy cut would take its toll on local commodity prices.

The government had announced in June that electricity prices would rise by almost 15 percent in the fiscal year which began July 1.

In Nigeria, several stakeholders have called on the federal government to remove fuel subsidy or risk falling into bankruptcy.

As at April, the federal government was spending N1.86bn on subsidy daily.

Last month, Muhammadu Sanusi, emir of Kano, asked President Muhammadu Buhari to end fuel subsidies. He had said “N1.5 trillion on subsidy is N1.5 trillion out of education“.

Three days ago, Stuart Symington, US ambassador to Nigeria, advised the federal government to get rid of fuel subsidy.