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Egyptian electricity prices to rise as subsidies slashed once more

Egyptians could end up paying anywhere between 20-40 percent more for their power as austerity bites
Egyptians are increasingly out of pocket as austerity measures bite

Egypt announced on Tuesday fresh cuts to its electricity subsidies from July, which is due to raise prices by an average of 26 percent.

Electricity costs for factories are to rise by 41.8 percent, while for households they will go up 20.9 percent, Electricity Minister Mohamed Shaker said.

The cuts come as part of the Egyptian government’s efforts to slash energy subsidies, which the country has committed to as part of a $12bn International Monetary Fund loan programme begun in 2016.

According to the government, electricity subsidies will be entirely phased out by the end of the fiscal year 2021-2022.

'Up to 1,000 kilowatt [per month], there is a subsidy'

- Mohamed Shaker, electricity minister 

Shaker said the cuts were decided "taking into serious account the low-income [Egyptians]".

The minister said the higher the consumption of electricity, the higher the subsidy cut, adding: "Up to 1,000 kilowatt [per month], there is a subsidy."

Austerity hits hard

Egypt’s economy has struggled badly since the 2011 uprising that toppled long-time leader Hosni Mubarak.

In an attempt to tackle the critical budget deficit problem, the government has begun to implement an austerity plan backed by the IMF.

The austerity measures have hit hard. In 2016, the Egyptian pound was floated, causing it to lose 50 percent of its value. Egyptians lost much of their spending power as a result.

Since the pound’s devaluation, subsequent energy subsidy cuts such as the one announced on Tuesday pushed inflation to critical levels.

Fuel subsidy cuts have raised the cost of living for Egyptians. Last month, rises in the price of the Cairo metro caused impromptu protests as commuters suddenly found a third of their wages being spent on travel.

Food subsidies, too, have been cut, angering the 70 million people relying on state handouts.

In May, demonstrations in Giza and Alexandria railed against the latest cuts in the bread subsidies, which hit the poorest Egyptians the hardest.

According to the Egyptian government, however, the measures are having some positive effects.

The planning ministry said last month that Egypt’s GDP growth for the 2017-2018 fiscal year’s third quarter rose to 5.4 percent from 4.3 percent in the corresponding period the previous year.