CAIRO (Reuters) – A discussion board arrange by Egypt’s president started discussing on Monday a attainable shift within the nation’s subsidy programme in the direction of paying money instantly as a substitute of providing meals merchandise at diminished costs, a system many economists say might be extra environment friendly.
Any transfer in the direction of money funds could be important as a result of for many years Egypt has offered subsidies on bread and different staples to a lot of the inhabitants, and former makes an attempt to reform this politically delicate programme have led to protests.
Egypt spends round 370 billion Egyptian kilos ($7.6 billion) on direct subsidies, in keeping with the 2024/25 price range, of which 36% is allotted to meals. Over 60 million folks can purchase staples like pasta, vegetable oil and sugar at discounted costs, whereas at the least 10 million extra profit from closely backed bread.
For months, President Abdel Fattah al-Sisi and senior ministers have criticised the subsidy system, arguing that it fails to profit essentially the most susceptible whereas inserting a heavy burden on state funds.
The Worldwide Financial Fund, which is lending Egypt $8 billion beneath its newest assist programme, mentioned in August {that a} discount in untargeted subsidies would offer extra room for social safety and human capital growth.
Sisi introduced the Nationwide Dialogue in 2022 as a approach to generate coverage debate and suggestions inside limits set by the state.
Most of the discussion board’s suggestions stay unimplemented although former minister and nationwide dialogue board member Gouda Abdel Khalik mentioned its dialogue of subsidies signalled that the federal government meant to maneuver ahead with the reform.
“The government is determined to cut subsidies, and they’re using the national dialogue to portray it as expert-backed,” Abdel Khalik mentioned.
On Sunday, the Nationwide Dialogue issued an announcement laying out the potential advantages of a shift to money subsidies.
About 60% of Egyptians are estimated to reside under or near the poverty line. Many have relied on subsidies as costs have soared and the foreign money has weakened.
Mohamed Fouad, an economist on the American College in Cairo, mentioned money subsidies may higher goal the neediest however solely with clear standards on how they’d be focused and linked to inflation.
