Egypt to Expand Cheap Bread Access to Offset Blow to Budget

Egypt will roll out a program to allow people not covered by its state support program to buy bread at prices close to those covered by subsidies.

(Bloomberg) —

Egypt will roll out a program to allow people not covered by its state support program to buy bread at prices close to those covered by subsidies.

Under the system to be rolled out next week, authorities will issue debit cards that can be topped up and used at bakeries that normally sell subsidized bread, Supply Minister Aly El-Moselhy said Monday. Prices will be at or near cost and will be reviewed monthly, he said without providing details.

The country — one of the world’s biggest wheat buyers — is grappling with its highest inflation rate in five years and a surge in consumer prices partly triggered by Russia’s invasion of Ukraine. The new program is aimed at offering consumers a cheaper source of bread, as well as to ease pressure on the state’s budget caused by bakeries selling on subsidized loaves at a premium.

The plunging value of the Egyptian pound will result in more than a 76% increase in the state’s bread subsidy bill, El-Moselhy said Sunday. The current subsidy program covers about 70% of the nation’s 104 million residents, leaving officials struggling annually with a hefty cost, which they’ve worked to cut gradually without stoking social unrest.

Read also: Egypt Pound Plunges in Third Devaluation in Less Than Year

Authorities have also been working on plans to revamp the subsidy system including possibly turning to a cash system — a move El-Moselhy said was untenable at present given accelerating inflation and the pound’s devaluation.

Read also: Egyptian President Calls for Revamp of Costly Subsidy System

–With assistance from Agnieszka de Sousa.

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