EGYPT: Parliament raises fuel prices

In a sudden move, the Egyptian parliament voted Monday in favor of a package of price hikes and tax surges in order to pay a recently-announced 30% wage raise.

The new package increased primarily fuel prices and imposed higher license fees on cars with high-capacity engines. The diesel prices were raised by 47%; Octane 90 by 35%; Octane 92 by 32%; Octane 95 by 57%.  The new hikes are expected to generate extra revenue of US$ 2.25 billion to pay for the pay raise that President Mubarak announced last week.  The government claims that the package would affect the haves for the sake of the have-nots, as only car owners would be the ones mostly affected.

“We could not provide the big wage raise that the President asked for without having real revenues. Otherwise, the wage raise would lead to inflation,” Prime minister Ahmed Nazif told reporters shortly after the endorsement of the new increases in parliament.

Nazif claimed that his government’s package would not trump Mubarak’s wage raise.

While the increase of fuel prices are expected to elicit more public outrage, the government insists that the poor have nothing to worry about. “The citizen should not feel frustrated because I simply took money from the financially capable to give to the less capable,” Nazif said.

“The citizen should be happy with his income raise and not get disappointed by the minor price hike,” he added

However, Nazif’s optimism may not necessarily resonate with Egyptians, who expect the surge in transportation cost to affect the market.

The bill backed by the ruling party was disclosed to the public, debated in parliament, approved and implemented in less than twelve hours.

The price increases come at a tense time, as Egyptians have been seriously hit by the recent increase in world food prices.Opposition forces have been calling for national strikes to protest inflation, which put Mubarak’s regime under unprecedented pressure. To contain public outrage, the 80-year-old autocrat was forced to announce an immediate wage hike that is expected to benefit around 6 million state-paid employees.

It is still to be seen if today’s legislation will add more fuel to the fire.

—Noha El-Hennawy in Cairo

Photo: President Hosni Mubarak (AFP)

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