Egypt’s food subsidy system reform faces opposition

The new plan could affect millions of people who rely on the subsidies even if they are rich enough on paper to do without them.
Sunday 03/03/2019
Politics of food. A man carries bread along a busy street near a banner for Egyptian President Abdel Fattah al-Sisi . (Reuters)
Politics of food. A man carries bread along a busy street near a banner for Egyptian President Abdel Fattah al-Sisi . (Reuters)

CAIRO - Egypt has started applying new regulations to ensure the delivery of food subsidies to the neediest members of the general public.

The regulations, which went into effect February 1, exclude millions of people from the nation’s food subsidy system, raising fears of how the changes might affect the poorest Egyptians.

“The government cannot reform the subsidy system by depriving millions of people of these subsidies under the pretext that they do not deserve them,” said consumers’ rights campaigner Mahmoud al-Asqalani. “The new regulations are so tough and cause harm to the poor.”

More than 80 million people are registered in Egypt’s food subsidy system, which allows Egyptians to buy food, particularly bread, at a fraction of their market price using food stamps.

The new regulations reduced the number of food subsidy beneficiaries by approximately 10 million. The Ministry of Supply said it would reduce the number of beneficiaries further in the coming months.

The regulations exclude members of the general public who own cars whose market prices exceed 2 million Egyptian pounds ($114,000), pay more than 35,000 pounds ($2,000) in school fees for their children each year and who pay more than 1,500 pounds ($85) for electricity consumption each month.

“We want to deliver the subsidies to those who deserve them,” Egyptian Minister of Supply Ali Muselhi said.

The Supply Ministry will apply more regulations in April to again lower the number of people who qualify for the national food subsidy system. These new regulations would exclude people with high mobile phone bills, who own land and those in senior posts.

The regulations are part of Egypt’s reform of the subsidy system, which has defied changes over the years because of the important place subsidised bread holds on the Egyptian conscience.

During the Egyptian revolution, protesters chanted “Bread, freedom and social justice.” Food riots over subsidy cuts to the daily bread allowance have occurred as recently as last year.

Egypt spends around $500 million a year to subsidise food. Those registered in the food subsidy system are eligible to buy cooking oil, rice, sugar and bread for less than 20% of market value.

The system is essential to tens of millions of poor Egyptians, although lower-middle class and even upper-middle class Egyptians are known to use the system.

The food subsidy system change is a small detail in Egypt’s economic reform programme that has included slashing subsidies on all commodities and services, including car and home fuel, electricity and water.

The reforms aim to reduce pressure on the general budget, reduce the budget deficit and make available enough funds to bankroll the upgrade of the country’s educational and health systems.

A lack of strict subsidy system regulations allowed millions of affluent Egyptians to join millions of poor citizens outside food outlets and bakeries to get subsidised commodities.

Yumna al-Hamaqi, an economics professor at Cairo University, said some of her pupils, who pay thousands of dollars in fees for university education, told her that they are registered in the food subsidy system.

“Some of these pupils have graduated from very expensive international high schools and yet they are registered in the food subsidy system,” Hamaqi said. “This is far from fair.”

The food subsidy system includes all types of Egyptians, from the richest to the poorest. University professors, deputy ministers, medical doctors, engineers, senior police officers and company executives are registered in the subsidy lists along with those with no jobs.

The government said it wants to use the money saved to offer additional food aid to the poor, estimated at 25 million people.

The fear, however, is that the new plan could affect millions of people who rely on the subsidies even if they are rich enough on paper to do without them.

Asqalani, who runs an NGO that campaigns for reasonable food prices, said not all of those who enroll their children in private schools, for example, can be considered rich.

“Some of these people deprive themselves of food to give their children quality education,” Asqalani said. “Nonetheless, they will be deprived of the subsidies, even as they need them, only because they are mistakenly classified as rich.”

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