Cairo- Egypt announced a major increase (18-42 percent) in electricity prices on Thursday as authorities continue to implement an IMF-backed economic reform package.

Electricity Minister Mohamed Shaker announced the increase during a news conference, noting the decision will become applicable on the first of July.

He added that electricity subsidies were supposed to be phased out entirely by the end of the 2018-19 fiscal year, but considering the special situation related to the large increase in the exchange rate, the subsidies will be phased out more gradually by the end of 2021-22.

Shaker stated that Egypt spent EGP64 billion ($3.6 billion) on electricity subsidies during the 2016-17 fiscal year, more than twice the EGP30 billion initially expected in the budget. The price hikes will cut subsidy spending to EGP52.7 billion in the current fiscal year and then to EGP43.4 billion in the 2018-19 fiscal year.

Under the revised payment structure, Egyptians who consume below 50 kilowatts of electricity will see prices rise to EGP0.13 per kilowatt, prices for the second-highest usage tier of 50 to 100 kilowatts will go up to EGP0.22 per kilowatt, Shaker said.

Since November, Egyptian authorities have floated the country’s currency, resulting in a surge of the dollar value with one dollar worth EGP8.8 in November now worth more than EGP18.

This step led to an unprecedented inflation in Egypt, exceeding 25 percent by the end of 2016 and continued to rise until it reached a record level in April (33 percent).

In order to protect the poor and low income workers, the Egyptian Ministry of Finance announced recently an increase in allocations for the social protection program to reach EGP75 billion (around USD4.1 billion).