Egypt to increase price of subsidized bread by 300%, says Prime Minister

Egypt to increase price of subsidized bread by 300%, says Prime Minister
Egypt to increase price of subsidized bread by 300%, says Prime Minister

Egypt, often the world’s largest wheat importer, will raise the price of heavily subsidized bread for the first time in decades, a politically sensitive decision that has been delayed for years.

The price of subsidized bread will increase by 300%, from 5 piastres to 20 piastres ($0.0042) from June, Prime Minister Mostafa Madbouly said at a press conference on Wednesday.

About two thirds of the Egyptian population benefit from a program which provides 5 round loaves per day for 5 piastres per loaf. An attempt to change the subsidy system provoked riots in 1977.

This aid is a lifeline for the poor, but it is often

critiqued

as a waste and a burden on the budget.

The announcement comes after Egypt allowed a sharp devaluation of its currency in March and moved to a flexible exchange rate system. Inflation reached a record high last summer and has eased somewhat since then.

“We fully understand that (rising prices) is a thorny issue and that many governments (in the past) have tried to avoid tackling it,” Madbouly said.

“But today we see the scale of the subsidy bill for the Egyptian state and we therefore had to start acting as little as possible to ensure the viability of the service.

Mr Madbouly said the government was studying the possibility of providing conditional cash subsidies for bread.

After two years of chronic shortage of foreign currencies, Egypt has obtained since the end of February a windfall of financing from the IMF, the United Arab Emirates and other entities.

The new increased price represents 16% of the cost of making bread, which rose from 115 piastres last year to 125 piastres, said Ali Moselhy, Minister of Supply, at the same press conference.

In March, the finance ministry said it would allocate around 125 billion Egyptian pounds ($2.66 billion) for bread subsidies in its 2024/2025 state budget and around 147 billion pounds for subsidies. to petroleum products.

Egypt imported approximately 10.88 million metric tons of wheat in 2023, an increase of 14.7% from 9.48 million metric tons in 2022.

Moselhy told Reuters the decision will not have an impact on the quantities of wheat imported by the state.

($1 = 47.2500 Egyptian pounds) (Reporting by Nayera Abdallah in Dubai and Momen Saeed Atallah in Cairo; Writing by Sarah El Safty; editing by Michael Georgy, Jason Neely and Bernadette Baum)

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