Egypt’s largest cigarette manufacturer, the Eastern Tobacco Company, announced that an increase in the price of cigarettes produced by Egyptian companies is set to start on Thursday in accordance with recent amendments to the value-added tax (VAT) law.

In an official statement, the company said cigarette prices are set to increase between 12.5% and 21.7%, or by EGP 2 to EGP 3.5 per pack.

The amendments, which were approved by parliament on Tuesday at the government's request, are a part of broader economic reforms aimed at narrowing the nation's gaping budget deficit.

It remains unclear whether the increase will also apply to cigarettes produced by foreign-owned companies such as BAT-Egypt and Philip Morris International, which both use Eastern Company factories to manufacture their locally-sold products.

Government officials have stated the new hike in cigarette tax will benefit social protection programs, including the country's national health insurance system.

Minister of Finance Amr El-Garhy said on Tuesday that the new tax hike is expected to generate between EGP 7-8 billion in revenue.

The Egyptian pound has lost about half of its value since Egypt floated its currency in November of last year, which has resulted in increased prices for many products.