Egyptian political parties weary of fuel price hikes

Ahram Online, Sunday 6 Jul 2014

The increase in fuel and electricity prices comes after Egypt’s newly elected president, Abdel-Fattah El-Sisi, ratified a new annual budget

Petrol station
Petrol station (Photo: Bassam Al-Zoghby)

The sudden increase in fuel and electricity prices in Egypt has been both welcomed by some economy experts and criticised by political parties that think the decision will negatively affect citizens are already burdened by high commodity prices and an economy hit by political turmoil.

The increase in fuel and electricity prices comes after Egypt’s newly elected president, Abdel-Fattah El-Sisi, ratified a new annual budget.

The new budget managed to trim the country’s deficit by LE48 billion, down to LE240 billion, or 10 percent of Gross Domestic Product (GDP), based on a LE44 billion cut in energy subsidies.

Spokesman of the leftist Tagammu Party, Nabil Zaki, decried the decision, adding that it is not in the interest of the poor as the low and middle classes are already suffering from high food prices and cannot bear further increases in fuel prices.

The Tagammu Party was one of the socialists parties that supported El-Sisi's presidential bid.

The decision, according to Zaki, is considered a return to old policies where the government pays its debts from the pockets of the poor, Al-Ahram Arabic website reported.

He added that the government could have taken alternative routes to pay off its budget deficit, including imposing progressive taxation and restituting money lost to corruption, which could bring billions back to the country.

What the government is currently doing, according to Zaki, is favouring businessmen at the expense of the poor and low-income individuals.

Meanwhile, the liberal Free Egyptians Party is yet to announce a stance on the increase in fuel prices.

Spokesman of the party Shehab Wagih told Ahram Online the party's programme supports lifting subsidies, so that the government stops spending the revenue on "luxury-car owners" and instead uses the money to offer direct financial aid to the poor.

The party, however, is monitoring whether there will be a hike in commodity prices before deciding a stance, Wagih added.

The Egyptian Social Democratic Party, from which former premier and prominent economist Hazem El-Beblawi hails, generally supports the lifting of subsidies from fuel as the party finds them unjustifiable. However, party spokesman Ahmed Fawzi told Ahram Online the increase in fuel prices would directly affect the poorer classes.

He added that the lifting of subsidies should have been measured according to the services provided to citizens.

"There should have been effective public transport projects for mass transport of people, and an effective system for monitoring markets before increasing fuel prices," Fawzi stated.

Fawzi added that the lifting of subsidies would not necessarily ensure that the money goes to those who deserve it, as the Ministry of Supply is unable to effectively monitor markets to stop price hikes on commodities. Corruption in municipalities would also lead to an increase in commodity prices.

Meanwhile, the leftist Socialist Popular Alliance Party released a statement supporting economic reforms but criticising the decision to increase the prices of natural gas and electricity to households, saying it burdened the individual rather than owners of big industries.

The Free Front for Peaceful Change, meanwhile, released a statement calling on El-Sisi to retract his decisions, emphasising that the decision burdens Egyptians and increases national anger. The association reminded El-Sisi in their statement of his promise to side with the people.

The statement directly blamed Prime Minister Ibrahim Mahlab, describing him as "working against the people," adding that his "departure from his position has become a popular demand."

Meanwhile, head of the Reform and Development Party Mohamed Anwar Al-Sadat approved the decision. Al-Sadat, as reported by Al-Ahram Arabic, said that despite the decision to raise fuel prices being a "hard decision," it was necessary to take crucial decisions to end fuel subsidies.

Al-Sadat also said that the government has to reconcile with the people and El-Sisi has to speak with the people and explain that his decisions are a new start on the right path, and that people will understand once El-Sisi speaks to them.

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