DUBAI/CAIRO: Egypt will raise the price of heavily subsidised bread for the first time in decades.
The price of subsidized bread will jump 300% to 20 piasters ($0.0042) from 5 piasters starting June 1, Prime Minister Mostafa Madbouly told a press conference Wednesday.
About two-thirds of Egypt’s population benefit from a program that gives 5 loaves of round bread daily for 5 piasters a loaf. An attempt to change the subsidy system led to riots in 1977.
Egyptian government raises price of subsidised bread by 300 percenthttps://t.co/v17IriCU44
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The handout is a lifeline to the poor, but is often criticized as wasteful and a strain on the budget.
The announcement comes after Egypt allowed a sharp devaluation of its currency in March and shifted to a flexible exchange rate system.
Inflation, which surged to a record high last summer, has eased a bit since then.
“We understand fully that (the price rise) is a thorny issue and many governments (in the past) tried to avoid moving on it,” Madbouly said.
“But we see today the size of the subsidy bill on the Egyptian state and so we had to start to move as little as possible to ensure the sustainability of service.”
Madbouly said the government is studying the possibility of conditional cash subsidies for bread.
After two years of chronic foreign currency shortages, Egypt has secured a windfall of funding since late February from the IMF, the UAE and other entities.
The new raised price represents 16% of the cost of making the bread, which has risen to 125 piasters from 115 last year, Supply Minister Ali Moselhy told the same press conference.
The finance ministry in March said it would allocate around 125 billion Egyptian pounds ($2.66 billion) for bread subsidies in its 2024/2025 state budget. Another 147 billion pounds would be for petroleum product subsidies.
Egypt imported about 10.88 million metric tons of wheat in 2023, up 14.7% from 9.48 million tons in 2022.
Moselhy told Reuters that the decision will not impact wheat imports.
(REUTERS)
