(MENAFN - AFP) Egypt's President Abdel Fattah al-Sisi on Sunday defended a government decision to raise fuel prices as the authorities also slapped higher taxes on cigarettes and alcohol, state media reported.
The authorities late Friday decided to slash state subsidies on petrol and diesel, sparking anger among taxi drivers and others affected by the rising costs.
Police arrested two people on Sunday after dispersing a protest by fishermen angered by the fuel price hike in the coastal city of Rosetta, state media reported.
In a meeting with newspaper editors and television channel representatives, Sisi argued that the decision had to be taken because of Egypt's debts, state-run Al-Ahram newspaper reported on its website.
With the economy battered by three years of unrest, successive governments have said subsidies - which made petrol in Egypt among the world's cheapest - must be lifted.
The ex-army chief, who toppled Islamist president Mohamed Morsi in July 2013 before himself being elected president by a landslide in May, has repeatedly advocated austerity to narrow the budget deficit.
"Whether we wanted to or not, these decisions had to be taken, now or later," Al-Ahram quoted Sisi as saying.
"It's better to face (the situation) instead of letting the country drown," he said, citing increasing government debt.
The state spends almost 30 percent of its budget on fuel and food subsidies, in a country were nearly 40 percent of the population of 86 million hover around the poverty line.
On Sunday, the authorities also announced a new tax of 50 percent of the retail price of imported cigarettes, while local cigarettes will be subject to a few extra pounds' in tax, the state news agency MENA reported.
Local and imported beers were slapped with a 200 percent tax increase, while local and imported wines become subject to a 150 percent increase, it said.
With many fearing that the fuel price rises will impact other prices, Sisi acknowledged that Egypt currently lacked any market controls, but said such mechanisms should be fully operational within six months, MENA said.
The political turmoil unleashed by the ouster of strongman Hosni Mubarak in 2011 has devastated the economy, badly hitting key tourist revenues and investments.
Since the overthrow of Morsi, who was viewed with suspicion by regional powerhouses such as Saudi Arabia and the United Arab Emirates, Arab states in the oil-rich Gulf have pledged billions of dollars in aid to Egypt's military-installed authorities.