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Egypt to raise bread prices but subsidy remains, PM says

Published

7 months ago

May 28, 2024

According to Prime Minister Mostafa Madbouly, Egypt must raise the price of bread, an essential good that is significantly subsidized in one of the largest wheat importers in the world, but it will still “largely be subsidized” on Monday.

In March, Egypt’s minister of finance, Mohamed Mait, said the country’s 2024–2025 budget will include $2.66 billion for wheat subsidies and $3.13 billion for petroleum product subsidies.

Egypt is a major global importer of wheat as well as other staple foods and petroleum. The nation is currently experiencing deficits in the balance of payments, a gaping budget, and foreign exchange shortages.

By the end of 2025, Egypt will also investigate “balancing” the pricing of petroleum products to reduce their financial burden on the state budget; nevertheless, Madbouly noted that gasoline prices will continue to be subsidized.

Egypt stated in a memorandum of intent signed in November 2022 that it would permit price increases for the majority of petroleum products to align domestic prices with those of global energy markets.

Egypt’s quarterly review in March included price increases on a broad variety of gasoline items. At a news conference, Madbouly added, “Egypt will begin paying 20–25% of arrears due to foreign energy companies next week.”

Egypt started to accrue arrears to contractors and businesses during a protracted lack of foreign cash. Following the announcement of a record investment deal, a devaluation, and an extension of Egypt’s existing International Monetary Fund program, the scarcity has decreased during the previous month.

Egypt’s currency is now valued at roughly 31 pounds to the US dollar for 12 months. Its total expenditure by July 1st of the following fiscal year will be 3.9 trillion pounds ($82.89 billion). A total of 2.6 trillion pounds are expected to be produced.

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IMF, Egypt reach agreement for fourth review of Egypt’s $1.2 billion loan request

Published

2 days ago

December 26, 2024

Ifeoluwa Dada

Egypt and the International Monetary Fund (IMF) have reached a staff-level agreement over the fourth review of the Extended Fund Facility arrangement, which might lead to a $1.2 billion payout under the program.

In March, Egypt, struggling with rising inflation and cash shortages, consented to the $8 billion, 46-month facility. Its economic problems were made worse by a precipitous drop in Suez Canal revenue over the last year due to regional tensions.

Over the next two years, Egypt’s government has committed to raising its tax-to-revenue ratio by 2% of GDP, according to the IMF, emphasising removing exemptions rather than raising taxes.

According to a statement from the IMF, this would allow it to expand social expenditure to support vulnerable populations.

“While the authorities’ plans to streamline and simplify the tax system are commendable, further reforms will be needed to enhance domestic revenue mobilization efforts,” the statement said.

According to the IMF statement, Egypt had also committed to maintaining its commitment to a flexible currency rate and to taking more urgent action to guarantee that the private sector became the primary driver of development.

The IMF’s executive board still has to accept the fourth review’s staff-level agreement.

VenturesNow

Libya’s eastern govt accepts petrol subsidy elimination

Published

2 days ago

December 26, 2024

Ifeoluwa Dada

In a recent statement, the eastern government of Libya claimed it had reached a consensus on a plan to eliminate gasoline subsidies and would draft a mechanism to carry out the accord.

Additional information on the idea was not released by the administration led by Osama Hamad, a challenger to the internationally acknowledged Tripoli-based government.

However, it is uncertain if Hamad’s government would be able to carry out the plan in the divided nation.

According to the Global Petrol Prices online tracker, a litre of gasoline costs just 0.150 Libyan dinars ($0.03) in OPEC member Libya, making it the second-cheapest in the world.

Following an uprising against former ruler Muammar Gaddafi in 2011, smuggling networks have thrived in the ensuing political unrest and armed fighting. In 2014, conflicting eastern and western governments separated the nation.

A World Bank analysis estimates that the annual value of fuel smuggling from Libya is at least $5 billion.

In a meeting with Mari Barrasi, the deputy governor of the Central Bank of Libya (CBL), located in Tripoli, and four members of the bank’s board of directors, Hamad in Benghazi supported the idea of removing subsidies.

The CBL’s Benghazi branch offices served as the venue for the conference.

The eastern parliament appointed Hamad in 2023 to succeed Abdulhamid Dbeibah, who had been put in position in 2021 under a U.N.-backed procedure that the parliament said had lost its legitimacy.

Dbeibah, who is located in Tripoli, stated in January that he will conduct a public poll on the topic of eliminating gasoline subsidies, but he hasn’t done anything about it since.

According to CBL figures, gasoline subsidies cost 12.8 billion Libyan dinars between January and November of this year. 4.8 Libyan dinars to $1 is the official exchange rate.