Egyptian Prime Minister Mostafa Madbouly said that the recent increase in fuel prices imposed by his government did not exceed 9.7%, despite the significant increase in global oil prices, which reached 54%.
This came in a press conference on the sidelines of the government meeting in its new headquarters in the New Administrative Capital. “35% of the inflation rate in Egypt is currently coming from abroad, due to the rise in fuel and freight prices globally. Egypt is part of the world that is witnessing a very turbulent period in which it is experiencing an unprecedented wave of inflation, amid expectations that inflation will reach 5.5% in developed countries,” he added.
The government had implemented three consecutive increases in gasoline prices during April, July, and October of 2021. Thus, a liter of gasoline 80 became at a price of 7 pounds, a liter of gasoline 92 at a price of 8.25 pounds, a liter of gasoline 95 at a price of 9.25 pounds, and a liter of diesel at 6.75 pounds.
The latest increase was the eighth since President Abdel Fattah al-Sisi took office in 2014. The price of a liter of Octane 80 increased from 0.8 to 7 pounds per liter, an increase of more than 740%, and Octane 92 increased from 1.85 to 8.25 pounds, an increase of more than 330%. In 2019, the government began applying an automatic pricing mechanism to a number of petroleum products, after liberalizing their prices within a program that it implemented to gradually eliminate subsidies for these products.
The price equation states that gasoline prices are adjusted every three months, not exceeding 10% of the selling price in the local market, based on three main factors: the global price of a barrel of oil, the Egyptian pound exchange rate against the US dollar, and the amount of change in cost components.
The Egyptian authorities had imposed a tax on petroleum products, with the aim of fixing the selling price locally in the event of a decline in international fuel prices. Petroleum subsidies in Egypt’s general budget have declined by more than 87% during the past four fiscal years. In the budget for the fiscal year 2021-2022, subsidies for petroleum products decreased from 28.19 billion pounds to 18.41 billion pounds, a reduction of 35%, while it amounted to 145 billion pounds in the 2017-2018 budget.