Protesters outraged against fuel subsidy cut blocked streets in many cities in Egypt on Sunday as taxi drivers went on strike. With the cut in state subsidy, fuel prices have risen nearly 80% this weekend.
A hike of 80% on fuel prices came into effect Monday morning together with other increases in the sector, such as the adjustment of electricity tariffs applied in early July. The cut in subsidies, which consume about 25% of the state budget, is a commitment by the Egyptian government. At a news conference, the Egyptian Prime Minister, Ibrahim Mahlab said that not adjusting the prices would have been a “crime” in the country’s management.
Price of public transportation has nearly doubled. The government also raised taxes on cigarettes by 50% and rates on beer by 200%, in an attempt to contain the budget deficit, which was around 12% of GDP in the last three years.
Mahlab defended the measures, stating that energy subsidies have cost $ 96 billion to the Treasury in the last decade. The government expects to save $ 7 billion from this measure in FY 2014-15, which would be invested in education, health and other social benefits.