Egypt raises fuel prices by up to 15% ahead of IMF review on July 29

Prime minister announces plan to cut subsidies to break-even point by December 2025

A petrol station worker fills a car in Cairo. The Egyptian government is increasing fuel prices as part of economic reforms. EPA

Egypt increased fuel prices on Thursday as part of a plan to gradually remove subsidies by December 2025, the official gazette reported, following a speech by Prime Minister Mostafa Madbouly detailing the state's intentions.

The move comes amid continuing power cuts that have sparked discontent among citizens.

According to the gazette, petrol prices increased by up to 15 per cent per litre, with 80 octane rising to 12.25 Egyptian pounds ($0.25) from 11 pounds, 92 octane to 13.75 pounds from 12.50 and 95 octane to 15 pounds from 13.50. The price of diesel was set at 11.5 pounds a litre, up from 10 pounds.

Egypt has been implementing an International Monetary Fund-backed economic reform programme since 2022, which saw it devalue its currency four times and substantially cut food and energy subsidies, though some remain in place.

The IMF says that as subsidies are reduced, those remaining can be better “targeted” to help the poorest families.

Thursday’s fuel price rises were a key requirement of the IMF for the disbursement of the third tranche of Egypt's loan, amounting to $820 million, financial analysts told The National.

The third review of the country’s reform programme was postponed from July 10 to July 29 while the fund waited for the prerequisite lifting of subsidies on food and fuel to be implemented.

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

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 Egyptian pounds in 2025/26.

The government's efforts to lift subsidies have been met with resistance from citizens who say their living costs have been soaring in recent years. The situation has been exacerbated by continuing power cuts, which have disrupted daily life and sparked anger among Egyptians.

Despite Mr Madbouly's promise last week that unpopular daily power cuts would cease until September, residents across the country say these have continued.

The government attributes the power cuts to record high consumption and technical malfunctions, but many citizens view these explanations as excuses.

Some experts say that reducing subsidies will, in the long run, create a virtuous circle of new investment in the electricity sector, eventually eliminating power cuts.

However, the government must navigate a precarious path between meeting the IMF's requirements and managing public discontent in the short term.

The fuel price increases, while necessary for securing the IMF funds, may further strain the relationship between the government and its citizens.