Egypt continues economic reforms with cuts to fuel subsidies

Whoever said that the fasting month of Ramadan and the Eid are quiet was quite mistaken. This year, Ramadan and the Eid saw tough economic measures, with the prices of Cairo metro ticket increasing just before the month started and water prices soaring during the holy month.

The Ministry of Electricity then announced new price hikes to go into effect on 1 July. A new cabinet was sworn in on the eve of the Eid, and then came further hikes to oil products.

None of these moves was a surprise, however, as the price hikes are part of a broader economic reform programme designed to “restore macroeconomic stability, strengthen fiscal and external sustainability, and lay a solid foundation for inclusive and robust growth, and employment creation,” according to the government’s letter of intent to the International Monetary Fund (IMF).

The programme is backed by a $12 billion three-year Extended Fund Facility (EFF) from the IMF.

“The government clearly wants to send a message to the IMF and the global investment community of its strong and irrevocable commitment to a continued reform process,” said Khaled Hamza, head of investment banking at Sigma Capital, an investment bank.

Former minister of finance Amr Al-Garhi recently said that the financial results for the July 2017 to May 2018 period had confirmed that the government could meet its targets for the fiscal year that ends on 30 June, including a primary surplus of 0.1 per cent of GDP for the first time in decades and a total budget deficit of 9.8 per cent of GDP.