Egypt raises fuel prices, with minimum wage and pensions to rise from April 1

Increasing cost of domestic energy likely to spark inflation and comes amid reports of soaring fuel subsidies

A petrol station in Cairo, Egypt, where the national government has increased domestic fuel prices. Reuters
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Egypt on Thursday announced a package of wage and pension increases in its latest bid to cushion the effect of soaring prices only hours after authorities raised domestic fuel prices by more than 10 per cent, a move that is likely to increase inflation.

The package, announced by President Abdel Fattah El Sisi in a televised address, will come into effect on April 1.

It raises the minimum monthly wage for entry-level government employees to 3,500 pounds ($116) and to 5,000 pounds for mid-ranking employees. The minimum wage for government workers with a master's degree will now be 6,000 pounds, while those who hold a doctorate will receive 10,000 pounds.

Pensions will be raised by 15 per cent and the threshold of collecting income tax will rise from 24,000 to 30,000 pounds per annum. Monthly stipends for the most vulnerable of Egypt's 104 million people under a state programme called Takaful and Karamah will be raised by 25 per cent.

"I would like to clearly state that I have the interest of the Egyptian citizen constantly before my eyes, with the goodness of his life a specific target we never steer away from," said Mr El Sisi in his address, delivered at a ceremony to open development projects in Minya, a province south of Cairo.

"As much as I realise the magnitude of pressure citizens have to endure at present, I also have confidence in their ability and self-denial as they face challenges," said Mr El Sisi, a former army general in office since 2014.

The package, the latest in a series over the past year, was announced as the most populous Arab state is reeling from a deep economic crisis significantly worsened by the outbreak of the Russia-Ukraine war a year ago.

The crisis led Egypt to devalue its currency by nearly 50 per cent and sparked a foreign currency crunch that has curbed imports, including vital materials needed for domestic industries.

Earlier on Thursday, the state's fuel pricing committee raised domestic fuel prices by 0.75 Egyptian pounds ($0.025) for 80-octane petrol to 8.75 pounds a litre, and by one pound to 10.25 pounds for 92-octane fuel.

The committee also raised the premium 95-octane petrol by 0.75 pounds to 11.50 pounds a litre.

The price of natural gas for vehicles was also increased from 3.75 pounds a cubic metre to 4.50 pounds.

The price of diesel, widely used for the transport of goods and passengers across the country, remains at 7.25 pounds a litre, the committee said.

The latest fuel price increases will probably raise the cost of other goods at a time when most Egyptians are facing the challenges of an ailing economy.

Year-on-year inflation rose to 25.8 per cent in January — a five-year high — chiefly because of rising food prices. Experts expect figures to show it rose further in February.

The government turned to the International Monetary Fund for help, reaching a deal last year for a $3 billion loan to shore up its finances.

The IMF agreed to the deal in return for major reforms, including a flexible foreign exchange regime and the private sector being allowed a greater role in the economy.

The government announced last month it was offering investors stakes in 32 state-owned enterprises, including two banks.

Reports in the pro-government media say fuel subsidies have increased in the first half of the current fiscal year, which began on July 1.

They say it stood at 66 billion pounds, up from 17 billion in the corresponding period of the previous year.

Reports attributed the increase to higher oil prices on world markets and the government's earlier reluctance to raise domestic fuel prices.

Updated: March 02, 2023, 5:20 PM