Amid a deepening cost-of-living crisis forcing people to cut food intake, Egyptians were slapped with another IMF-instigated fuel price hike on Friday, October 17. On the heels of an almost 15% hike this April, the price of diesel, the most widely used fuel in the country, increased by almost 13%. The petrol price is up by 10.5% to 12.7%, depending on the octane level.

The government had hiked fuel prices several times after the IMF expanded the USD 3 billion 46-month Extended Fund Facility agreed upon in December 2022 to USD 8 billion on March 6, 2024.

That very day, the government fulfilled the IMF’s long-standing demand by floating Egypt’s currency, which lost over 60% of its value vis-à-vis the dollar within hours. After thus depleting the purchasing power of Egyptians, the government has hiked fuel prices five times since, including thrice in 2024.

On March 22, 2024, the government hiked the price of diesel by 18%. It imposed a 33% hike on butane gas cylinders on which millions, especially the poorer households lacking natural gas supply, depend for cooking. Then again in July that year, fuel prices were hiked by another 15%, followed by a third increase of up to 17% that October.

Squeezing food affordability

The impact of the consequent price increase of other commodities, including food, compounded by the loss of purchasing power due to the currency float, was aggravated by the quadrupling of the price of subsidized bread – a lifeline for millions of poor – in June that year.

The government hiked its price to 20 piasters, up from the five piasters at which about two-thirds of the country’s population were able to buy five loaves daily.

Prices of food items, rising 54.7%, amounting to “over 44% of household expenditures among the bottom quintile”, was the “main driver” of inflation last year, noted the World Bank Poverty & Equity Brief report on Egypt in October 2024.

“This is expected to exacerbate the pre-existing socio-economic challenges that are mostly affecting the poor and most vulnerable households,” the report added, even as the World Bank continues to nudge Egypt to continue with the “reforms”.

Government to end fuel subsidy by year-end

And continue it did, with two more fuel price hikes in April 2025 and again last week. “Progress has been made in limiting energy subsidies over the past decade” said the IMF’s Country Report on Egypt in July 2025. But the IMF, it added, seeks to “improve upon this through” the complete “removal of (explicit) fuel subsidies.”

“We remain firmly committed to reducing fuel subsidies by restoring fuel prices to their cost recovery levels by December 2025,” Egypt’s Finance Minister and the Governor of the Central Bank have assured the IMF’s Managing Director in a letter of intent this February.

In other words, the government has committed to eliminate the fuel subsidy by the close of this year. Although the prime minister has indicated that diesel will remain subsidized, it will be financed by charging higher than cost recovery levels for other fuels, so that fuel subsidy as a whole will be reduced to zero.

“Decisively reducing the role of the public sector in the economy is an urgent priority,” says IMF

The elimination of the fuel subsidy does not end the structural adjustments imposed by the IMF “Decisively reducing the role of the public sector in the economy is an urgent priority,” insisted its staff report published this February.

Egypt’s public sector, which offers better terms than the private sector, was providing jobs to about 20% of all its employed people in 2022. This however was before the three billion dollar loan by the IMF that December. Although now down to 17.7%, the public sector still employs about 5.6 million of the 31.56 million employed people in the country.

The government, however, has reassured the IMF in its Memorandum of Economic and Financial Policies that, “the State Ownership Policy, endorsed by President El-Sisi in late 2022” includes “divestment”.

It has already sold its equity in “seven marquee hotels, several petrochemical companies, and the state-owned tobacco company. Most recently, we completed the initial public offering (IPO) of 30% of United Bank. Looking forward, we will accelerate the divestment program, and have committed publicly to offer 4 companies owned by the armed forces on the Egyptian Stock Exchange”, added the Memorandum.

“A substantial part” of the proceeds from this sale of the public sector must be used to pay old debts, the IMF insists as one of the conditions attached to the expansion of its loan from three to eight billion dollars last March.

In its own words, “a new framework to slow down infrastructure spending” by the government is one of the “pillars” of the IMF’s reform program.

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