From Washington Post

 

Egyptian drivers wait in line to buy fuel at a gasoline station in Cairo, Egypt, Saturday, July 5, 2014.

 

Egypt’s government raised the prices of fuel by up to 78 percent starting Saturday, following on

 

a promise to cut subsidies that eat up nearly a quarter of the state budget, the official news agency

 

reported. The country’s successive leaders have balked at reducing subsidies because half of

 

the country’s 85 million people live at or below the poverty line of $2 a day and rely on government

 

subsidies of wheat and fuel for survival. 

 

 

CAIRO — Egypt’s prime minister on Saturday defended a steep rise in fuel prices as necessary move to

 

shore up the treasury, as outraged commuters bickered with public transport drivers over fare hikes and

 

some rushed to gas stations over fears of shortages.

 

 

 

The price increases of up to 80 percent came into force early on Saturday in a swift announcement made

 

just hours earlier, following promises to cut subsidies that eat up nearly a quarter of the state budget.

 

They also come after an increase in electricity prices that were put in effect at the start of July.

 

 

 

Prime Minister Ibrahim Mahlab, addressing a televised news conference, said energy subsidies have

 

over the past decade cost the treasury a staggering 687 billion pounds (nearly $100 billion) that could

 

have been used to bolster essential services.

 

 

 

He said it would be a “crime” if his government did not move to start lifting subsidies. He argued that

 

26.3 percent of Egypt’s estimated 86 million people live in poverty and that overall unemployment stands

 

at 13.6 percent, reaching above 50 percent for Egyptians aged between 20 and 30.

 

 

 

“There will have to be political, social and economic reforms,” vowed Mahlab. “Debts are mounting and

 

the question we must ask ourselves is whether we want to leave this legacy for future generations.”

 

 

 

Mahlab said the partial lifting of energy subsidies would free 51 billion pounds (about $7 billion) to be

 

spent on education, health care, pensions and raising wages.

 

 

 

Newly elected President Abdel-Fattah el-Sissi has said he would need to tackle the tough issue of

 

subsidies and asked every Egyptian to be ready to sacrifice to help the country’s battered economy after

 

three years of turmoil.

 

 

 

The former military chief also asked the government to amend the largest budget in Egypt’s history - at

 

$115 billion - to reduce its deficit from 12 to 10 percent.

 

 

 

The fuel price rise was highest for 80 octane gasoline, used mostly by old vehicles that still fill Egyptian

 

streets, with the price jumping 78 percent to 22 cents per liter. Diesel fuel, used by most of Egypt’s public

 

transport and trucks, increased 64 percent to 25 cents a liter. Gasoline that is 92 octane increased by 40

 

percent to 37 cents a liter.

 

 

 

Successive Egyptian leaders have balked at reducing energy subsidies, fearing unrest.

 

In some areas, the decision spurred a rush on gas stations, with long lines forming and many motorists

 

frustrated.

 

 

 

Some drivers of Egypt’s popular microbuses had raised their fares before the government announced

 

exact increases. Mahlab warned that authorities would intervene to make sure fare increases are limited

 

to around 10 percent. Taxi meters will also be changed to allow for higher fares, he added.

 

 

 

In the Canal city of Suez, microbus and taxi drivers refused to take on passengers until the government

 

announces a detailed new fare structure. Some employees had to walk to work. Drivers have forced

 

other public transportation vehicles to stop working until the fares are increased.

 

On line Saturday at one Cairo gas station, taxi driver and father of five Ebeid Ibrahim directed his

 

frustration at the president. “When el-Sissi came to office he said he did not have a magical wand to

 

make people’s lives better. We do not want anything form anybody, but at least the status quo should

 

have been left as it is. Where am I supposed to get money from?” said the 56-year-old Ibrahim.

 

 

Near him, Abdullah Ibrahim, 36 and father of three, stood in line to fill up his microbus, decrying

 

the sharp rise.

 

 

“We will raise the prices on the passengers who are in need just like us,” he said. “If they ask us to bear

 

extreme measures, they have to be reasonable, the rise will specifically affect the poor.”