Egypt raises fuel prices for first time in 2025 as subsidy phase-out continues

Egypt's government announced significant increases in fuel prices on Friday, with rates rising between 11.7 per cent and 33.3 per cent in different categories.

This increase, the first this year, is part of a broader effort to phase out subsidies and align fuel prices with international market rates by the end of the year, as stipulated under the International Monetary Fund’s $8 billion Extended Fund Facility agreement last year.

The Ministry of Petroleum and Mineral Resources said the price per litre of 95-octane petrol had been raised by 11.7 per cent to 19 Egyptian pounds ($0.37), 92-octane petrol by 13.1 per cent to 17.25 pounds, and 80-octane petrol by 14.5 per cent to 15.75 pounds.

The price of diesel rose by 14.8 per cent to 15.50 pounds per litre, while the price for a butane gas cylinder for households was raised by 33.3 per cent to 200 pounds.

Fuel prices will not be reviewed for another six months, the ministry said, signalling that another hike would be necessary to bring fuel prices to market levels. It said a gap remained between production costs and market prices, with the state continuing to subsidise diesel, butane and lower-octane petrol to ease the burden on citizens.

Egypt last adjusted fuel prices in October.

The government currently spends about 366 million pounds daily – 11 billion pounds each month – on fuel subsidies, according to the ministry.

Egypt’s move to raise fuel prices is the latest in a series of steps towards economic reforms tied to its agreement with the IMF, which include subsidy cuts, currency devaluation and a reduced role for the state in the nation’s economy.

The IMF last month approved the disbursement of $2.5 billion to Egypt after completing the fourth review of the Extended Fund Facility programme. The fund commended the government’s efforts to stabilise the economy but stressed the need to reduce energy subsidies entirely by the end of 2025. It also said that the exit of the state from the national economy had been slow.

Prime Minister Mostafa Madbouly on Wednesday warned of the impact of global trade disruptions and rising import costs on Egypt’s economy and anticipated more inflationary pressures for Egypt in the coming months.

Price hikes come against the backdrop of falling inflation this year. Egypt’s annual inflation rate reached 13.1 per cent in April, down from 24 per cent in January, marking its lowest level since March 2022.

However, economists have cautioned that the decline is mainly attributable to a favourable base effect and does not fully reflect underlying economic pressures.

Balancing fiscal responsibility with the social impact of reforms remains a critical challenge as the country works to meet its IMF commitments. More than 62 million Egyptians rely on a sprawling food subsidy programme, and the country’s foreign currency reserves remain strained due to declining natural gas exports and disruptions in Suez Canal revenues caused by regional conflicts.

In its statement on Friday, the ministry said global geopolitical tensions and fluctuating production and transportation costs continue to drive up fuel prices.

It also highlighted ongoing efforts to boost domestic production and reduce reliance on imports.

“The state is committed to increasing local output by offering incentives to production partners, thereby reducing the overall import bill and mitigating the financial burden on the economy,” it said.