Egypt: Slashed Fuel Subsidies Stir Discontent

Cairo — “If you don’t like the price, go talk to your government,” a microbus driver shouted at his passenger. “What do you expect me to do? Take the price hit and feed my children pebbles?”

The two squabbled, drawing in onlookers into a heated debate at a Cairo bus station.

Egypt’s government has announced the most drastic price adjustment to fuel prices in decades in a long awaited move to restrain energy subsidies that consume a fifth of annual budget and keep gasoline prices in the Arab world’s most populous nation among the lowest in the world.

The cabinet, appointed last month by newly elected President Abdel Fattah al-Sisi, announced the measures as part of Egypt’s attempts to reduce its deficit to 10 percent of Gross Domestic Product (GDP) in the next fiscal year, from an expected shortfall of 12 percent in 2013-14.

But the new measures have not gone by without protest.

“The worst is yet to come. This argument about prices is just the beginning,” 58-year old driver Ali Badawy told the Thomson Reuters Foundation, pointing at the clash nearby. “I voted for the first time in my life this year. I elected Sisi. But to start his term with fuel price hikes that could very well bury us is a risky business.”

In the new scheme, the price of 92-octane gasoline will be 2.60 Egyptian pounds (36 cents) per liter, up 40 percent from its current price of 1.85 Egyptian pounds, while 80-octane gasoline would rise to 1.60 Egyptian pounds, up 78 percent. Natural gas for vehicles, on which many taxis rely, is to rise by 175 percent to 1.10 Egyptian pounds per cubic meter.

While Egypt ranks among the ten cheapest countries in the world for petrol, critics argue removing subsidies needs to be accompanied by complementary measures to protect wages and mitigate price inflation. In Cairo and across several provinces, scattered and minor protests by taxi drivers were reported across the media.

“Are we supposed to leave this nation in debt and poverty? We only fear God. We will not be intimidated by loud voices,” Prime Minister Ibrahim Mehlab said in a press conference, adding that the new price scheme will save the budget 51 billion Egyptian pounds for this fiscal year, most of which will be allocated to health and education expenditure.

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