Egypt: Gas Prices Hiked 75% & Gasoline Prices by 50% To Pay Back IMF!

Photograph: Mohamed Abd el Ghany/Mohamed 
Abd el Ghany/Reuters/Corbis

Egypt has been in crisis mode over the last few years.

Saudis and UAE have given them deposits to keep the Govt. an the country running. 

Since 2016, USD 12b has been received from IMF as loans. Various subsidies on gas, gasoline, water, electricity etc have been slashed. 

Unemployment is on the rise rapidly as businesses close or slow down in a country of approx 95m population.

In order to pay back the IMF, public is being fleeced.

Last month, Egypt hiked the petrol and diesel prices by 50%.

Egypt raises gasoline prices by up to 50%

Yesterday, July 21, 2018, Egypt has hiked LPG prices by 75%.

Egypt raises gas prices by up to 75 pct to promote economic reform 

IMF approves 4th tranche of Egypt’s $12 billion loan

Where did this USD 12bn go? Nobody knows.

Unemployment is rising very rapidly and we can expect social & political turmoil in the months ahead.

Egypt’s powerful president is facing unusual dissent over rapidly rising prices

Last few months, people have been protesting on social media and asking PM Sisi to resign as the pressure intensifies.

Egyptians Enclosed Hashtag “Sisi Leave” Urging Him to Resign Amid Recent Price Hikes

Major impact of gasoline and gas price hikes will be seen in the next 6-12 months because this will impact trucks, food, travel, everything causing even more businesses to shut down or slow down.

As if price hikes, unemployment, military rule, hyperinflation, massively depreciating currency etc was not enough, just like Iran, Sweden, India, South Africa, Egypt, too, has run out of water.

The standard economic theory is that if the currency depreciates, then it will help exports (but ALL other things must be equal and stable).

However, in today’s world, 4 paradigms have showed up in the last several years turning school text books into garbage paper which nobody likes to discuss or research upon:

1.    Every nation is depreciating their currency hence the benefit of depreciated currency to one nation is declining. 

2.    There is this mindless concept of FREE MONEY and zero interest rates in developed countries with QE etc because developed countries themselves are fragile, bankrupt, cracking and in survival mode. This allows the elites in developed countries to survive but crushes everyone else in the developed world as well as exports hyperinflation across the planet causing mayhem globally (except in insulated nations like China etc.).

3.    Never in world history, there were sanctions, bans, tariffs and water crisis all at the same time as we face on the planet today among various nations thus disrupting global trade, global capital movement and global migration flows. 

      Egyptian water crisis is causing their exports to decline and now they face depleting reserves and depleting income in USD.

4.    Every single country in the world including the largest ones like USA, China etc are focused on exports. However, if EVERYONE wants to export and nobody wants to import, then how can exports of any country rise?

Water crisis leading to decline in Egyptian exports is here:

Egypt turns from rice exporter to importer due to water scarcity 

Recent values to indicate massive depreciation in USD EGP.

1 July 2009: 5.59

1 July 2010: 5.65

1 July 2011: 5.90

2 July 2012: 6.96

1 July 2013: 7.02

1 July 2014: 7.15

1 July 2015: 7.83

1 July 2016: 8.88

1 July 2017: 18.15

1 July 2018: 17.96

Since July 2009, the Egyptian Pound has lost 221% of it’s value.