Egypt postpones raising gas prices, pending IMF evaluation

CAIRO – 28 September 2017: Egypt postponed the decision to raise gas prices following requests it made to the International Monetary Fund, although the latter had planned a new increase by the end of the year to the reservation of the Egyptian officials, Egypt Today revealed.

Professor Fakhry Al Fiki, a former official in the IMF, exclusively revealed to Egypt Today that Egypt is definitely not going to raise gas prices again and that the scheduled raise was postponed in agreement with the IMF. He added that such a decision is going to yield positive results in the future because it will facilitate price and inflation rate controls.

A high profile official revealed to Egypt Today that Egypt has put forth a request to officials in the IMF to postpone the effectuation of some of the demands that the latter has laid down for the coming period.

According to the source, the negotiations were made between Egyptian Minister of Finance and officials in the IMF as an attempt to reach an agreement whereby the scheduled raise in gas prices in the coming period could be postponed.

He added that meetings were held between officials in the Ministries of Finance and Petroleum and they agreed on creating new financial resources to cover the deficit in the general budget without having to raise the prices of gas and other petroleum products again.

The ongoing negotiations with the IMF stand on the ground that postponing the raise will be compensated with an increase in production and progressive taxes.

The source further affirms that the IMF has asked Egypt during the past months to raise the prices of petroleum products, yet the Egyptian government had strong reservations against such requests and in the negotiations that followed, Egypt requested an exemption from another raise in fuel prices in 2018.

The request to postpone raising oil prices, which comes as an attempt to alleviate the citizen’s economic struggles and to avoid another wave of inflation in the coming period, was initially denied by the IMF but was later scheduled for reconsideration; if the IMF approves the Egyptian request, delegations from the Fund would be sent to Egypt to monitor the repercussions of the decision.

The source also affirms that the IMF’s delegation, which is scheduled to arrive in Egypt in October, is going to conduct evaluations and revisions before delivering the third installment of the Fund’s loan. It will also undertake the task of identifying the expending channels of the second installment.

Additionally, officials in the IMF have stressed the necessity that Egypt should control the price of its currency and exert efforts to increase the value of the Egyptian pound again.

The source also adds that Egypt has agreed with the UAE on a number of things on top of which is the agreement that the Emirates is to deliver new batches of petroleum products to Egypt at reduced prices in order to cover the fuel shortage that Egypt is facing. Egypt is also going to receive a loan from the Emirates in November to cover the budget deficit.

Meanwhile, the Egyptian government is seeking to devise plans to control inflation and minimize price increases, and others to control the currency by boosting the value of the Egyptian pound in the coming period so that some balance in the economic situation could be achieved. With such a comprehensive plan, the state aims at steering the wheel of economic growth.