By Sarah El Safty

CAIRO (Reuters – Egypt may replace a popular bread subvention with cash payments to the poor in order to save the budget against rising global wheat prices. However, domestic inflation and a history full of protests might force the government into a more modest reform.

The existing program provides 5 loaves daily of bread for just 50 cents per month to more than 60,000,000 Egyptians. This is little change since the countrywide “bread Riots” in 1970 prevented any price rise.

Although the handout provides a vital lifeline for the poor, it is often criticized as wasteful. The high global wheat prices, which Egypt imports in large quantities, forced President Abdel Fatah al-Sisi last year to declare that the time had come to end the bread subsidy.

Ali Moselhy (minister in charge of subsidiaries) told Reuters inflation has risen to 6% in the last months, from 4% in 2021. This makes it more difficult to replace support for bread with cash handouts.

He stated, “When inflation stays stable, then it’s possible to introduce cash.”

Moselhy stated that he favors giving money to people specifically for bread purchases. The monthly voucher of $3.20 for subsidised food is already available to eligible Egyptians.

He said that a wider idea of introducing unconditional payments to the welfare system would be more efficient than an economist’s preferred option. This could drive up inflation by increasing cash circulation during times of high inflation.

Officials have revealed that the government is working to prepare a plan for reforming food subsidies by March’s budget preparations.

Moselhy stated that the government has not made a decision about what it would do. Instead, they are focusing on improving the recipients’ database with the goal of “finding who needs what.”

This could indicate that changes to the program are less likely to be implemented, such as a means test, limiting the number of people who are eligible or raising the cost of sub-subsidized bread.

Bassant Ibrahim (36), a Beheira resident and a wife who lives in north-west Cairo said that any restrictions shouldn’t hurt her family, which depends on subsidies to support her husband, $180 per month, as well as feed her four children.

Ibrahim stated that while there are wealthy people who have cards you can sort out, the cost of the food for the poor should not be prohibitive. He said his family ate the 10 loaves daily, and sometimes finished them before noon.

BREAD ROOTS

Sisi has previously overseen reforms of fuel and power subsidies. After rising commodity and shipping prices, his government increased the price of sugar and vegetable oils subsidised.

According to data from the finance ministry, the current food subsidy program costs $5.5 billion. Higher wheat prices are expected to increase the budget by $763 million in 2021/22.

Over the years, officials have played with the bread program, trying to limit eligibility as Egypt’s population grows. They also tried to shrink the amount of subsidised bread and offer credit to people who didn’t collect bread.

Since the 1980s, however, the subsidised basic loaf’s price has been constant at five piastres ($0.003)

For the Food Commodity Import Bill to be reduced, it would need deeper adjustments to the Bread Allowance. Governments have always been concerned about this since the 1977 attempt at scrapping subsidies. The riots continued for many days, until finally the decision was reversed.

Sisi’s adjustment to subventions so far and his announcement about it being time to tackle bread has triggered grumblings. But street protests remain banned.

Ahmed Mohamed, 24, is a Cairo married gardener and father of two kids. He said that he would be able to live off the state’s bread support.

He stated, “There are many people who require it more than me.”

Ahmed Darwish, an ex-minister, who overseen the transition from a traditional smart card system to one in early 2000s, stated that authorities must be cautious to ensure people are not left vulnerable by making any significant changes.

Darwish stated that “until the government states that this subsidy will be increased with inflation,” he said.