Egypt raises price of cigarettes as part of economic reforms

Egyptians consume about 83 billion cigarettes each year. (AFP)
Updated 12 July 2018
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Egypt raises price of cigarettes as part of economic reforms

  • Egyptians consume about 83 billion cigarettes each year
  • Poor and middle-class Egyptians have suffered the hardest the adverse effects of reforms, which began after President Abdel Fattah El-Sisi took office in 2014

CAIRO: Egypt hiked the prices of cigarettes on Thursday, the latest measure amid reforms designed to overhaul the country’s troubled economy still reeling from a costly 2011 uprising.
The announcement was made by the chairman of Egypt’s top cigarette manufacturer in a televised interview late Wednesday. Mohamed Haroun, Eastern Tobacco Company chairman, said his company will impose an increase of 1.5-3 Egyptian pounds, or about 8-17 cents, per pack of smokes.
The increase would, among other things, help fund a new health services system by over 3 billion Egyptian pounds annually, or $168 million, he said.
Egyptians consume about 83 billion cigarettes each year, according to Haroun. He noted that prices of cigarettes had gone up about five times between 2014 and 2017.
Egypt recently introduced a new wave of price hikes for fuel, drinking water and electricity, as well as for new cellular phone lines and monthly landline phone bills. Prices for issuing passports and car licenses also went up steeply.
Poor and middle-class Egyptians have suffered the hardest the adverse effects of reforms, which began after President Abdel Fattah El-Sisi took office in 2014.
Price hikes and subsidy cuts have been accelerated after the floatation of the national currency in 2016 as part of measures taken to qualify for a three-year $12-billion bailout loan from the International Monetary Fund to support the government’s reform program.
Other austerity measures, including a value-added tax, were also imposed.
El-Sisi recently said the reforms have put Egypt on “the right track” and urged patience as they take effect. In a July address in parliament, Prime Minister Mustafa Madbouly said the people should start benefiting from the reform program within two years.


Iran looms large over OPEC summit

Updated 22 September 2018
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Iran looms large over OPEC summit

  • Saudi Arabia only country in Mideast, and perhaps world, with enough capacity to keep market supplied, say experts
  • At Algiers, Opec and leading non-Opec countries are expected to discuss how to allocate supply increases to offset a shortage of Iran supplies

LONDON: The Opec summit in Algiers on Sunday meets amid widespread fears of a supply crunch when a forecast 1.4 million barrels a day of crude is lost from Iran in November when US sanctions kick in.
If, on top of that, more supply shocks hit the market in worse-than-expected disruption from Libya and Iraq, the price of crude could surge, said Andy Critchlow, head of energy news at S&P Global Platts. “At the moment, the market looks finely balanced,” he said.
There isn’t a lot of slack in the system. As Critchlow points out: “Upstream investment in infrastructure and new wells is historically low and it will take a long time to turn that around.”
At Algiers, Opec and leading non-Opec countries are expected to discuss how to allocate supply increases to offset a shortage of Iran supplies. The gathering comes after a tweet by President Trump on Sept. 20 calling on Opec to lower prices. He said on Twitter that “they would not be safe for very long without us, and yet they continue to push for a higher and higher oil price.”
Critchlow reckoned KSA still had spare capacity of about 2 million bpd. And KSA would get oil back as they go into winter as it had needed 800,000m bpd merely to generate electricity for the home market to meet heightened demand for air conditioning in the summer.
But there is uncertainty about what will come out of Algiers. For a start, the Iranians say they will not attend. That could be tricky in terms of an Opec communique at the end of the meeting as statements need unanimous support from member nations. And Iran has indicated it will veto any move that would affect Iran’s position, ie, one where other countries absorb its market share as sanctions bite.
Jason Gammel, energy analyst at London broker Jefferies, said: “The magnitude of the drop in Iranian exports is likely to be higher than any hit in demand as a result of problems linked to emerging market currencies, or trade wars. That’s why we expect oil prices to continue to strengthen. The Saudis and their partners will keep the market well supplied, and I think the issue is that the level of spare capacity in the system will be extremely low. Any threat or interruption will mean price spikes. Possibly by the end of the year demand will exceed supply; for now, the market remains in balance, but threats of supply disruption will bring volatility.”
Under the spotlight in Algiers is a production cuts accord forged by Opec and 11 other countries in 2016 which has been extended to the end of this year. The agreement helped reboot prices and obliterate inventory stockpiles that led to the crash in crude prices nearly three years ago. But how long will the agreement last? Algiers may kick that one into the long grass.
Thomson Reuters analysts Ehsan Ul-Haq and Tom Kenison told Arab News: “OPEC members would like to maintain cohesion within the group around supply ahead of Iran sanctions and declining Venezuela production, However, they are expected be in favor of maintaining stability in prices while doing so. On the other hand, they need to find a consensus around how their market share would be affected by a decision to pump more oil in the market. Any decision around production will likely be offset until the November meeting.”
Critchlow said that it is what KSA and Russia say and do that matters. “They speak for a fifth of the global oil market, producing a combined total of 22m bpd.” Together, they are the swing producers when it comes to crude production and supply.
Another factor about Algiers is that it is a meeting of the Joint Ministerial Monitoring Committee, which is not a policy-making forum. Big policy statements may have to wait for the main Opec summit in Vienna at the end of year. That said, there will be some very high-level delegations in Algiers, including the Saudi oil minister and his Russian counterpart.
A statement about the demand picture could emerge, especially as there are fears about the impact on the global economy from the US-China tariff war.
Looking to the future, Critchlow thought the Opec production cuts accord would carry on into 2019. “Oil priced between $70/bbl and $80/bbl is a sweet spot for Middle East producers. Its’s good for Saudi as it helps stop further drainage of their foreign reserves and moves the budget back toward balance. Do they want (the price) to go higher? I think that would cause a lot of political problems for them.”