CAIRO: The oil price hike is “100 percent correct,” head of the Federation of Egyptian Industries (FEI) Mohamed Zaky al-Sewidi said in a Sunday statement.
Sewidi said FEI understands that the government needs to decrease subsidies in order to reduce the budget deficit due to the current economic crisis.
Egypt’s budget deficit is 163.3 billion EGP ($22 billion) ten months into the fiscal year of 2013/14, down from 183 billion EGP in the same period in 2012/13, Ministry of Finance (MOF) reported in June.
From July 2013 to April 2014, the deficit amounted to eight percent of the country’s Gross Domestic Product (GDP) that is expected to reach 2 trillion EGP by the end of the current FY, according to the report.
The Cabinet increased the price of fuel between 0.70 EGP and 0.75 EGP ($0.04 – 0.05) per liter midnight Saturday.
The outlet cited an anonymous source that added that the increase in diesel price would be 0.70 EGP, raising the overall price per liter to 1.8 EGP. Gasoline of octane number 92 would be sold for 2.6 EGP per liter with an increase of 0.75 EGP.
Sewidi said the increase in fuel prices will not affect the price of food products and that the increase in price of fuel represents five percent of the cost of transportation, adding that some trade sectors exploit the “government’s deficit” and increased its prices.
He assured factories will not to increase the price of their products and demanded the government to apply subsidy on the poorer sectors.
The decision of raising the prices of fuel to factories was made according to a proposal from FEI, in coordination with the government, Sewidi said and that FEI proposed increasing the fuel prices by 25 percent annually for four years.