The government’s decision to apply hikes to subsidised government-set fuel prices on Thursday, entailing lifting gasoline and diesel prices by between 17-66%, has been viewed differently by various political bodies in the Egyptian government.
The 25-30 Alliance has rejected the recently applied new austerity measures.
“We declare that the president’s insistence to apply what is called the economic reform, according to the instructions of the IMF, is pushing the nation into a dangerous cliff, due to these economic decisions, which is opposed to the idea of social justice,” the coalition said in a statement.
The alliance, which is composed of 16 members of the parliament, has demanded President Abdel Fattah Al-Sisi to withdraw the decision to cut the subsidies on fuel products.
On the other hand, the Egypt Support coalition has praised the cutting of the subsidies. The coalition has been one of the biggest supporters of all decisions taken by the president and the government.
The head of the coalition, Mohamed El-Sewedy, demanded owners of private businesses to hand out a bonus of EGP 100-200 to employees.
The austerity measures, which the Egyptian government has been applying since 2014, have affected the prices of essential goods, public transportation, fuel, food products, and other services.
The price of a litre of gasoline 92 increased to EGP 6.75, up from EGP 5. The price of gasoline 80 and diesel fuel both increased from EGP 3.65 to EGP 5.50.
Inflation was the first side effect faced by the Egyptian economy following the economic reforms, skyrocketing to an all-time high of 33%, a few months after the currency flotation that took place in November 2016. However, it has since been declining to reach 21.9% in December 2017.
The IMF’s agreement to provide $2bn to Egypt as part of a three-year $12bn loan agreement is a stamp of approval on economic reforms being pushed through under the terms of the deal.
The latest payment, which remains subject to approval by the IMF’s executive board, will bring total disbursements under the agreement to $6bn.
In November 2016, Egypt floated its currency and reduced energy subsidies, as part of an ambitious economic reform programme outlined under the terms of the loan.
Since then, the Egyptian pound has approximately halved in value and inflation has soared, to record highs in what is widely acknowledged to have been a challenging adjustment period.