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EGYPT: GOV'T TO HIKE FUEL PRICES TO FUND SOCIAL RAISES

Egypt said it may hike fuel prices to pay for public sector wages less than two weeks after President Hosni Mubarak announced a 10% raise in social allowance for all government employees, the local media reported. The Finance Ministry is considering raising the price of gasoline 92 and 95 after the end of the current parliamentary session to compensate for the significant budget deficit caused by the 10% social raise, reports independant paper Al shourouk. The prices of cigarettes will also increase, the paper reported. Egypt usually increases fuel prices following the annual social allowance raises. On May 5, 2008, Egypt upped prices of high-octane fuel, natural gas prices for energy-intensive industries and cigarettes, as well as fees of vehicle licensing to finance a 30% increase of public sector wages. Many expect the increase to reflect on inflation, which fell to 11.7% in April from 12.1% in March. This led the Central Bank of Egypt's Monetary Policy Committee (MPC) to cut interest rates. Egypt's inflation rate has been declining recently, which prompted three interest rate cuts in the last four months. (ANSAmed - 01.06.2009).

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Alexander