(June 29)Egypt announced that fuel prices will be increased by up to 55 percent. This is the second rise since Egypt allowed the local currency to rise seven months ago.
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|Subsides on fuel and other items are being cut as one of a number of IMF-backed austerity programs. In exchange, Egypt is receiving a $12 billion dollar loan. The poor and middle class had already been hit by earlier measures such as the floating of the Egyptian pound late last year. Although fuel is still cheap compared to the price in many countries the increase is bound to boost inflation even more as well as increasing discontent with President Abdel el-Sisi's economic policies. However, Egyptian PM Sherif Ismail said at a news conference that the decision was essential and could not be delayed and said: "We took part of the value of the subsidies allocated to energy to use it for other subsidies that are important for limited-income and poor individuals." The IMF conditions also included the imposition of a value added tax (VAT) to help raise revenues. The IMF measures have helped create runaway inflation which is now about 30 percent. After floating the pound, Egypt spent billions trying to keep up the value of the currency but it went from a value of 8.9 pounds to the dollar when it was floated to 18 to the dollar afterwards, losing half its value.|