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Jul 4, 9:54 PM EDT

Egypt's government raises fuel prices by up to 78 percent to address staggering deficit

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CAIRO (AP) -- Egypt's government raised the prices of fuel by up to 78 percent starting Saturday, following on a promise to cut subsidies that eat up nearly a quarter of the state budget, the official news agency reported.

The price hikes, in effect as of Friday midnight, follow an increase in electricity prices that were put in effect at the start of July.

The Cabinet this week amended the government's budget to reduce a staggering deficit.

Newly elected President Abdel-Fattah el-Sissi, elected to office last month, has said he will need to tackle the tough issue and asked every Egyptian to be ready to sacrifice to help the country's battered economy after three years of turmoil.

The former military chief also asked the government to amend the largest budget in Egypt's history, at $115 billion, to reduce a budget deficit from 12 to 10 percent.

The amended budget featured a $6 billion reduction in the energy subsidy bill, government officials said.

The fuel price rise was highest for 80 octane gasoline, used mostly by old vehicles that still fill Egyptian streets, with the price jumping 78 percent to 22 cents per liter. Diesel fuel, used by most of Egypt's public transport and trucks, increased 64 percent to 25 cents a liter. The 92 octane increased by 40 percent to 37 cents a liter.

Energy and food subsidies eat up about a quarter of Egypt's state budget. The country's successive leaders have balked at reducing them because half of the country's 85 million people live at or below the poverty line of $2 a day and rely on government subsidies of wheat and fuel for survival.

Even though government officials had said over the last week that fuel subsidies would be reduced, the new price scheme was announced only a few hours before the decision was implemented. The decision caused a rush on gas stations, and lines formed outside them before midnight.

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