CAIRO, July 12 (Xinhua) -- Egypt on Thursday raised the prices of cigarettes and tobacco products by at least 10 percent as part of its efforts to reduce budget deficit in the 2018-2019 fiscal year.
"The government seeks to collect 58.5 billion Egyptian pounds (about 3.27 billion U.S. dollars) of taxes from cigarettes and tobacco products in the new budget for the 2018-2019 fiscal year," said Ibrahim al-Imbabi, head of the tobacco division of the Chamber of Food Industries at the Federation of Egyptian Industries.
The prices of some brands of cigarettes, particularly local ones, increased by 10 to 15 percent, while others by up to 29.4 percent.
According to the new price list released by Egypt's dominant cigarette maker Eastern Tobacco Company, the value added tax (VAT) represents at least 70 percent of the pack price.
In a televised statement Wednesday, the company chairman, Mohamed Haroun, said that 50 percent of the new price increase will be directed to the newly launched health insurance system.
The company said in a recent statement that it produced 83 billion cigarettes in the 2016-2017 fiscal year.
Egypt has been suffering economic recession over the past few years due to political instability and relevant security challenges. It devaluated its currency in November 2016 as part of a strict three-year economic reform program based on austerity measures, including fuel and energy subsidy cuts and tax hikes.
The liberalization of the Egyptian pound's exchange rate encouraged the International Monetary Fund (IMF) to support Egypt's economic reform plan with a 12-billion-dollar loan, two thirds of which has already been delivered.
In mid-June, Egypt increased fuel prices by up to 66.6 percent as prescribed by the IMF to continue the implementation of the country's economic reform program.